Seniors might increase their state pension by as much as £6,600 through certain methods.
Grandparenting: A Rewarding Role with Financial Perks
Embracing the role of a grandparent isn't just about creating precious memories; it can also bring financial benefits.
Taking on additional childcare responsibilities for your grandchildren may make you eligible to claim National Insurance credits. These credits can significantly enhance your retirement income, bridging any gaps in your National Insurance record.
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A recent analysis by Quilter reveals a surge in applications for this tax perk, known as Specified Adult Childcare Credits (SACC). There were 42,964 applications between October 2023 and September 2024, marking a 43% increase from the previous year and over double the number seen just four years ago.
Jon Greer, head of retirement policy at Quilter, notes, "The rising popularity of SACC reflects growing awareness among families that caring for grandchildren not only helps with childcare but can also boost retirement income."
Lisa Picardo, chief business officer at UK's PensionBee, agrees, "Community-focused childcare, like that provided by grandparents, is vital for helping parents stay in the workforce, and SACC acknowledges the essential role these caregivers play in the wider economy."
Let's delve deeper into SACC, how to apply, and its impacts on your state pension.
What Are Specified Adult Childcare Credits?
Introduced in 2011, SACC allows a parent receiving Child Benefit to transfer their National Insurance (NI) credit to an eligible family member, such as a grandparent. This is a beneficial arrangement if you are already contributing enough National Insurance toward your state pension and need to ensure the unused credit isn't lost.
The transferred credit can be utilized by an eligible family member who looks after a baby or toddler, allowing the parent to work and save on nursery fees or provides care during school holidays.
How SACC Credits Can Boost Your State Pension
To receive the full new state pension, you will require 35 years of NI contributions (30 years for the full basic state pension), with at least 10 years ensuring any state pension entitlement. Applying for SACC credits can be a strategic move to supplement gaps in your National Insurance record, thereby boosting your state pension earnings.
Quilter estimates that each year of transferred credit is currently worth £330 in additional state pension income for 2025/26, potentially adding nearly £6,600 over a 20-year retirement.
While no specific hour requirements are imposed, keep in mind that only one credit is available per Child Benefit claim, regardless of the number of children being cared for. However, if you provide care for a child from another family member, there will be two available credits for transfer.
"SACC credits are not only essential for securing the full state pension with National Insurance record gaps but are also a cost-effective method to do so," advises Jon Greer, head of retirement policy at Quilter.
Important Eligibility Criteria for SACC
- Eligible Family Member: You must be an eligible family member, such as a grandparent, aunt, uncle, or older sibling who provides care for the child.
- Child's Age: The child must be under 12 years old.
- Parent's Status: The parent of the child must receive Child Benefit and agree to transfer the credits to you.
- Your Age: You must be below the State Pension age, currently 66 years old.
- National Insurance (NI) Status: You cannot already have a qualifying year of National Insurance contributions, such as those from work or other credits.
Application Process for SACC
- Parent's Agreement: The parent who receives Child Benefit must agree to transfer their credits to you.
- Application Submission: Applications can be submitted from October 31 of the following tax year for which you are claiming credits.
- Backdating: Claims can be backdated to April 6, 2011.
- Single Credit Per Claim: Only one credit can be transferred per Child Benefit claim, regardless of the number of children being cared for.
Securing Your Financial Future with SACC
In conclusion, SACC can be a valuable resource for maximizing your state pension earnings while fulfilling your role as a caring grandparent. By understanding the criteria and application process, you can optimize your benefits and secure a more comfortable retirement. Just remember to consult your financial advisor for personalized advice based on your unique circumstances.
[1] Source: Gov.uk[2] Source: Quilter
Ensuring eligibility for Specified Adult Childcare Credits (SACC) can help boost your personal-finance and retirement income, as these credits can be transferred to eligible family members and used to supplement gaps in your National Insurance record, potentially adding thousands to your state pension earnings over a 20-year retirement.
If you are a grandparent, aunt, uncle, or older sibling who provides care for a child under 12 and the parent receiving Child Benefit agrees to transfer the credits to you, you may qualify for SACC. By understanding the eligibility criteria and application process, you can optimize your financial-benefits and secure a more comfortable retirement.
