HM Revenue and Customs (HMRC) is urging grandparents to consider a simple administrative switch that could add thousands of pounds to their future State Pension. The move involves transferring unused National Insurance (NI) credits from working parents to family members providing informal childcare.
How the Credits Work
Specified Adult Childcare Credits (SACCs) allow a parent who claims Child Benefit to transfer their weekly NI credit to an eligible family member, such as a grandparent, who is caring for a child under age 12. This helps grandparents fill gaps in their NI record, boosting their State Pension entitlement.
New data from wealth manager Quilter, obtained via a freedom of information request to HMRC, shows that 202,037 applications for SACCs were made between 2016-17 and 2024-25. Around 79% (159,116) were approved, highlighting the credits' role in bolstering retirement incomes.
Surge in Applications
Public interest has skyrocketed recently. HMRC records show applications surged from 29,967 in 2022-23 to 42,964 in 2023-24. Tax officials attribute this spike to increased media coverage raising awareness of the hidden benefit.
Many grandparents will be stepping in to care for children over the summer holidays, but most are unaware they could be entitled to these valuable credits. Jon Greer, head of retirement policy at Quilter, said: "For many people, securing the full state pension is a key foundation of later life income. These credits can offer grandparents a relatively simple way to strengthen their entitlement while helping family with childcare."
Eligibility and Pitfalls
The system rescues NI credits that would otherwise go to waste. A parent registering for Child Benefit automatically receives a weekly NI credit to protect their own pension. If that parent returns to work and pays NI through their salary, they don't need the Child Benefit credit. HMRC allows the transfer of that idle credit to an eligible family member providing informal childcare.
However, Quilter highlights a major catch: families must maintain their Child Benefit claim. If a high-earning parent opts out of the Child Benefit system entirely to avoid the High Income Child Benefit Charge, there are no NI credits available to transfer.
Despite the high success rate, Quilter's data reveals over 40,000 applications were rejected by HMRC. Experts note this significant number of unsuccessful claims points to widespread confusion surrounding the system's strict eligibility criteria.
