Thousands of grandparents miss out on pension credits

Thousands of grandparents caring for children in Britain are missing out on valuable pension credits, according to new figures.

If a mother or father goes back to work after the birth of a child and a grandparent or other family member looks after the child, they can receive national insurance credits under a government scheme.

Added to the NI record of the grandparent — if they are still under state pension age — these credits can help them build up a full state pension.

More than 10,000 grandparents and other family members received help with their state pension in 2017-18 after caring for children under the age of 12, according to figures obtained under a Freedom of Information Act by Royal London, the insurer. This represents a sevenfold increase on two years ago, but a fraction of the number who could benefit.

Royal London estimated that about 1m grandparents were potentially eligible for the additional pension credits but said a widespread lack of awareness led thousands of people to miss out on the extra financial benefits available.

“While it is great news that thousands more grandparents are now benefiting from this scheme, the numbers are still a drop in the ocean out of all those who could benefit,” said Sir Steve Webb, director of policy at Royal London.

“It is increasingly common for grandparents to spend some time each week looking after their grandchildren, often to enable a parent to go out to work. It would be quite wrong if these grandparents suffered financially in terms of their own state pension as a result.”

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Sir Steve called for the scheme to be better publicised. “I would encourage any family with a grandparent under pension age who helps out with the childcare to find out more,” he said.

In 2015-16, Royal London revealed that just 1,298 grandparents and other family members were benefiting from the scheme, under which credits can be backdated to April 6 2011. Following a burst of publicity, the number claiming rose to 10,084 by 2017-18, according to the new FOI response.

In the absence of official figures, the numbers of people missing out are an estimate. However, research by charity Grandparents Plus found that about two-thirds of all grandparents reported they spent time looking after grandchildren.

Sir Steve said: “Given that there are more than 7m grandparents in Britain with grandchildren under 16, it is hard to believe that the 10,084 who claim NI credits is more than a small fraction of those who are entitled.”

The additional national insurance credits can be of considerable value to someone who would not otherwise build up a full state pension. Each annual credit missed could cost someone 1/35 of the value of the state pension — around £250 a year or £5,000 over the course of a typical 20-year retirement.

Lucy Peake, chief executive of Grandparents Plus, said she welcomed a focus from government on addressing the pension crisis among grandparents who care for children. “Around half of kinship carers drop out of the labour market to care for children — often women, and often for the second time. Without entitlement to a financial allowance to cover the costs of raising a child, they are plunged into poverty and very worried about their financial future.”

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