Martin Lewis’ ‘little-known’ route to boosting state pension

Martin Lewis explains ‘grandparent credit’

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The boost comes by people transferring National Insurance credits, which parents or main carers for a child under 12 can get via Child Benefit, to the relative. If the parent or main carer pays National Insurance through their employment income, the credits can be passed onto a grandparent if they provide childcare for the child.

The transferred credits can be used to help fill any gaps in the grandparent’s state pension record and can be backdated to April 2011 if they were providing childcare then.

Appearing on the Martin Lewis Money Show Live last night, the Money Saving Expert founder explained the “little-known” way to boost the state pension.

He said: “If grandparents are looking after under 12s while the parent works, the working parent can apply for the Specified Adult Childcare Credit.

“It transfers the National Insurance credits that the parents would have got for looking after the children to the grandparent, so the grandparent gets it instead.

“Getting these extra National Insurance years, if you’ve got gaps in your National Insurance, can massively boost your state pension once you get into retirement, by thousands of pounds, over the rest of your life.

“Applicants can be backdated to 2011, even if some of it was virtual care during the pandemic.

Appearing on the Martin Lewis Money Show Live last night, the Money Saving Expert founder explained the “little-known” way to boost the state pension.
He said: “If grandparents are looking after under 12s while the parent works, the working parent can apply for the Specified Adult Childcare Credit.
“It transfers the National Insurance credits that the parents would have got for looking after the children to the grandparent, so the grandparent gets it instead.
“Getting these extra National Insurance years, if you’ve got gaps in your National Insurance, can massively boost your state pension once you get into retirement, by thousands of pounds, over the rest of your life.
“Applicants can be backdated to 2011, even if some of it was virtual care during the pandemic.

“You can’t get it if you’re already at state pension age but if you’re at state pension age, and you don’t get the full pension, and you did childcare before you hit state pension age, then you can backdate it.”

The credits are known as Specified Adult Childcare Credits and a person can apply to receive the credits using a form on the HMRC website.

To complete the form, the applicant will need to provide the full name, date of birth, address and National Insurance number for the parent or main carer of the child.

The form has to be signed by the parent or main carer as well as the applicant before the document is sent off to HMRC.

Applications need to be sent after October 31 after the tax year or years a person is claiming for.

A Child Benefit claimant can also transfer the credits they get from registering for Child Benefit to their partner who lives with them, if the claimant is paying National Insurance contributions.

The full new state pension is currently £185.15 a week while the full basic state pension is £141.85 a week.

With the 10.1 percent increase in April, the full new state pension will go up to £203.85 a week while the full basic state pension will rise to £156.20 a week.

A person typically needs 30 years of qualifying contributions to get the full basic state pension and 35 years of contributions to get the full new state pension.

Child Benefit can be claimed by Britons who have children aged under 16 or under 20 if the child is in education or training.

Claimants get £21.80 a week for their eldest or only child and £14.45 for any additional children.

However, a claimant may have to pay part of this back depending on how high their earnings are.

If a claimant earns more than £50,000 a year, or if their partner earns more than this figure, they may have to pay back part of their claim.

If one of them earns more than £60,000, they will have to pay back all of their claim, as part of the High Income Child Benefit Charge.

Clare Moffat, pensions and legal expert at Royal London, warned the tax charge has caused “many problems” since it was brought in 10 years ago.

She explained: “More and more families are being caught by this tax charge as the earnings threshold hasn’t changed since it was introduced.

“If it had increased with inflation then the starting amount would be over £63,000. At a time when costs are high, it can feel like families are being further penalised.”

The group has warned Britons may be put off claiming Child Benefit because of the tax charge and so miss out on the benefits for a person’s state pension.

Royal London said people can reduce their income and avoid the charge with pension contributions and gift aid donations.

Ms Moffat said: “It is quite right that parents who are looking after children get protection for their state pension record if they are out of paid work.

“Increasingly parents aren’t applying for Child Benefit but they need to make sure that they have still officially ‘claimed’ Child Benefit even if they have chosen not to receive payments. This means that they will still receive the credits.

“But this protection only works if the non-working parent claims Child Benefit. Missing out could mean that many thousands of parents are penalised in retirement.”

The Martin Lewis Money Show Live continues next week on ITV at 8pm.

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