Grandparents’ childcare help costs them £1bn in lost pensions
MORE than 100,000 grandparents are missing out on £1billion of state pension by taking time off work to care for grandchildren, research reveals.
Thousands who retire early or take a career gap to help with childcare lose out up to £1,000 a year in future pension income by failing to tell the taxman.
Many middle-aged people are unaware they can receive National Insurance credits towards their state payouts if they look after a grandchild under 12 while the child’s parents are at work.
The Government has been accused of failing to promote the scheme since its launch five years ago. It was designed to acknowledge the sacrifice made by grandparents who stop work to help with childcare.
But the policy also includes those who were never working in the first place, including housewives who now care for their grandchildren.
There is no minimum number of hours they must care for a grandchild to qualify, and it even includes people who look after them on an ad-hoc basis in the holidays or after school.
But the policy is so poorlypublicised only 1,298 grandparents and other family members applied for credits last year, insurer Royal London found.
That is fewer than two years earlier in 2014 when 1,725 benefited, although it is a marginal rise on the 2015 figure of 1,168.
Grandparents are missing out on as much as £920million worth of future state pension during retirement by failing to claim, the Royal London research found. Assuming those who have failed to claim have typically looked after grandchildren for two years, they will have lost £462 a year. This equates to £9,240 over a 20-year retirement.
‘Contribution is enormous’
If this is applied to the 100,000 who have so far failed to claim, it comes to £924million over the next two decades.
Steve Webb, of Royal London, said: ‘The fact that there is a scheme to make sure that grandparents do not lose out, by protecting their state pension rights, is a very good thing. But the scheme is not much use if hardly anyone takes it up.’
Grandparents not yet receiving state pension should fill out a form for ‘Specified Adult Childcare Credit’ to accrue credits.
Almost two million grandparents have either given up a job, cut their hours or taken time off to look after grandchildren, according to a poll.
Dr Lucy Peake, of Grandparents Plus, a charity which champions the role of grandparents, said: ‘When they give up their jobs to help out, they shouldn’t damage their future state pension in the process, and the system for making sure grandparents are protected in this needs to be much better publicised.’
The scheme was introduced in 2011 and applies to most relatives caring for a child under 12, including grandparents, greatgrandparents, aunties, uncles, brothers and sisters. Those eligible receive National Insurance credits for each week or part week they cared for the child.
From next year, grandparents can also share parental leave with their children and receive statutory pay for this.