Grandparents who look after grandchildren could increase their State Pension entitlement
Never more acute a need than during the long school summer holidays, Grandparents Plus and Age UK have estimated that childcare provided by UK Grandparents is worth £7.3 billion a year. With 1 in 4 working families and 1 in 3 working mothers using grandparents for childcare, and 1 in 5 grandmothers providing at least 10 hours a week of childcare, the proportion of child-caring grandparents who are of working age is set to grow as the State retirement age gradually rises.
However, the Department for Work and Pensions (DWP) is The proposed flat-rate pension from 2016 of £145.40 is only earned with 35 years qualifying contributions. If grandmothers gave up their own careers to raise their families, they may not have enough years in the bank to qualify for the full amount and will receive a pro-rated smaller amount.
However, current child benefit rules state that whomever is claiming child benefit (often, but not always the mother for this very reason) can claim a National Insurance stamp for child caring responsibilities until the youngest child reaches 12 years of age. However, if the mother is working, she could earn enough to get her National Insurance stamp through her salary (earning at least £109 per week) in her own right.
Now, parents and grandparents can retrospectively claim to transfer some or all of the child benefit National Insurance stamp to grandparent (or other family member under State Pension age) carers. The claim must be sent to HM Revenue and Customs in the October after the end of the tax year (ie from 1 October 2013 for 2012/13 claims) and can be made for any number of weekly stamps, with no minimum child caring hours requirement on the grandparent/carer. More details are available in this HMRC information sheet.
This credit transfer is only available for credits from April 2011 onwards, but claims can also be made 2011/12 tax year now. 2012/13 claims cannot be made until October, as HMRC needs to check that the parent surrendering the child benefit credit has earned enough to generate their own credit before making a transfer. Both parent transferor and child-caring transferee must sign the form.
Pensions Minister Steve Webb said
“Many grandparents are working hard all year round looking after their grandchildren, and it is important that they do not damage their own state pension rights as a result. Such grandparents are contributing to society just as much as someone in a paid job and should therefore be entitled to the same protection for their state pension as if they were in work.”