Article How caring for your grandkids could boost your State Pension

The cost of childcare is relatively high. The average fee for a full-time nursery place for a child under two is £285.31 a week, adding up to more than £13,500 a year.¹ Because of these high costs, you might be one of the many grandparents who now provide regular childcare for their grandchildren while parents are working. In fact, 27% of pre-school children received informal childcare (from grandparents, relatives or close friends) in 2022.²

But while you save your family money on nursery fees, did you know that you could also earn money from your childcare arrangement? This is due to a benefit called Specified Adult Childcare credits – which can be used to boost your State Pension.

We break down what Specified Adult Childcare credits are, the eligibility criteria and how you can apply. The information in this article is based on our understanding of the 2024/2025 tax year, but any figures may be subject to change.

What are Specified Adult Childcare credits?

Specified Adult Childcare credits are a type of National Insurance (NI) credit. They can be awarded to grandparents or other family members who care for a child under 12 while their main parent or guardian is working.

As an NI credit, Specific Adult Childcare credits count towards your State Pension entitlement. You need to have at least 10 years’ worth of National Insurance contributions (NICs) to qualify for any State Pension, and at least 35 years’ worth to get the full new State Pension. In the 2024/2025 tax year, this is £221.20 a week.³ 

So, if you’re not currently eligible for any or all of the State Pension amount, adding Specified Adult Childcare credits might help you to qualify and significantly increase your retirement income.

How do Specified Adult Childcare credits work?

Specified Adult Childcare credits work by transferring NI credits from one person to another. The credits are originally attached to the parent or carer who claims Child Benefit for the child. These credits are then transferred and attached to the grandparent or family member providing childcare, in the form of Specified Adult Childcare credits.

Here’s an example:

• You provide regular childcare for your grandson, Billy
• Your daughter Sally (Billy’s mother) currently claims Child Benefit for Billy. She also receives the NI credits attached to the Child Benefit
•  Sally chooses to transfer these NI credits to you, as Specified Adult Childcare credits
• Sally no longer receives NI credits, but continues to claim Child Benefit
• You continue to receive Specified Adult Childcare credits for as long as you’re eligible

If no one has claimed Child Benefit for the child, then there’s no attached NI credit to transfer and Specified Adult Care credits cannot be awarded. You can read up on Child Benefit on GOV.UK.

Remember to keep in mind that any parent or guardian receiving child benefit, receives NI credits. If the parent or guardian agrees to transfer these credits to the child’s grandparent as Specified Adult Childcare credits, they’ll miss out on these NI credits. Make sure the parent (or main carer) of the child doesn’t need these NI credits for themselves, before agreeing to transfer them to you.

Who is eligible?

You can qualify for Specified Adult Childcare credits if you meet the following criteria:

• You’re a grandparent or family member, caring for a child under 12 years old
• You’re over the age of 16 and under State Pension age when you cared for the child
• You’re a resident in the UK
• The child’s parent (or main carer) must be eligible for Child Benefit and have a qualifying year of NI (a full year where they have been credited with enough NICs to count towards a Basic State Pension)
• The child’s parent (or main carer) agrees to you making the application (they’ll need to countersign the application form)

Please note, you won’t be eligible if you already have a qualifying year of NI, or if you’re the person receiving Child Benefit for the child (as you’ll be receiving credits automatically). For more information of eligibility, you can find this on GOV.UK.

How much could I get?

Specified Adult Childcare credits can help you build up your NI record. If you qualify, you’ll receive a Class 3 NI credit (class 3 credits count towards building your State Pension only) for each week or part-week that you cared for a child. You can also backdate your claim credits to 6 April 2011 at the earliest.4

How much you’ll gain from these credits will depend on your individual circumstances. However, each qualifying year on your NI record after April 2016 could add up to an extra £6.32 a week to your State Pension. While this might not seem like a lot, this money can build up over time. The difference could be especially significant if you have more than one qualifying year added to your NI record or can backdate your claim by several years.

How do I apply?

To apply for Specified Adult Childcare credits, you need to fill in a form called CA9176. The application requires:

•  Personal details of the applicant
• Details of the child receiving childcare and what the periods of care are
• Personal details of the child’s parent or guardian
• The applicant and parent must both sign declarations on the application

The earliest you can apply is 31 October following a particular tax year. For example, for the tax 2024/2025 tax year, applications must wait until October 2025 so that HMRC can check the parent has a qualifying year for NI.4

Don’t miss out on a State Pension boost

The State Pension can be a welcome addition to any private pension or savings you may have. So, if you’re not currently eligible for the full State Pension amount, then Specific Adult Childcare credits could make all the difference.