Grandparents can boost state pension by £6,000 whilst saving parents £1,200 this summer

As grandparents are helping their families make savings on childcare, they are reminded to check if they can claim child care credits which can help boost their state pension by over £6,000.

More than four in 10 (43 per cent) grandparents now provide ‘holiday’ care and give up 18 hours a week on average to their grandchildren. This is up from 16.54 hours last year and equivalent to almost three days a week.

With the average cost of a nanny currently £11.68 per hour according to PayScale, that’s up to £1,265 in equivalent care saved over the summer holidays alone, and £2,953 across all school holidays.

Combined, UK grandparents are saving families £18billion in holiday care costs every year – £7.7bn of which is saved during the six-week summer break, SunLife found.

Grandparents who look after their grandchildren for free can claim Specified Adult Childcare Credits (SACCs).

These credits are specifically designed to help people below state pension age - which is currently 66 years old - to build up their state pension rights and qualify for the full payment.

SACCs provide a "valuable opportunity" for grandparents or other family members caring for a child under 12, to fill up any gaps in their National Insurance record.

The credits work by transferring the National Insurance (NI) credit that a parent or carer receives, as a Child Benefit recipient, to an eligible family member.

These ‘extra’ credits can then be transferred to the child’s caregiver, potentially increasing their state pension by £328 annually. Over the course of a standard retirement, this could increase their state pension by over £6,000.

People need 35 ‘qualifying years’ of National Insurance Contributions (NICs) to qualify for the full amount of state pension. They must have at least 10 years’ to receive any state pension at all.

The full new state pension is £221.20 a week in the 2024/25 tax year, and the full basic state pension is £169.50 per week.

SunLife's research found that not only are grandparents offering their services for free, but the vast majority (83 per cent, up from 81 per cent last year) are spending around £50 a week of their own money on average each week to do so.

While most (63 per cent) say they are more than happy to do it - they can claim the credits and get paid in the long run.

Mark Screeton, CEO at SunLife said: “The school holidays can be a really tricky time for working parents, especially those with primary school aged kids, as they suddenly need to find childcare to cover the six hours a day that their children are usually at school. That’s on top of any before- or after-school care that they rely on during term time.

“Holiday clubs can be really expensive, and childminders or nannies even more so. So it’s lucky that so many parents are able to rely on grandparents to help out.

"In fact, our research shows that an increasing number of grandparents are now offering their support in the form of free childcare. 43 per cent tell us they are looking after their grandchildren in the school holidays – up from 37 per cent last year – which could be saving families hundreds or even thousands across the school year.

"And while some grandparents may struggle with the physical and financial impact of helping out, most are more than happy to help if it means they get to spend time with their grandkids, with the vast majority willing to spend their own money in the process.”

Jon Greer, head of retirement policy at Quilter said: "These credits (SACCs) are not only crucial for securing the full state pension if you have gaps in your National Insurance record, but they are also a cost-effective method of doing so, versus paying to fill in missed years.

“It’s worth knowing too that the number of hours a grandparent helps out with childcare is irrelevant to the claim. Even if it's just one day a week, eligible grandparents should be able to claim.

"More needs to be done to highlight that these credits are available and to educate people on how to correctly apply so they avoid rejection.

“If not, this unsung workforce of child carers will fail to benefit despite playing a critical role in keeping the economy going especially over the summer months when working parents struggle with the rising costs of childcare and grandparents step in to save the day."

Grandparents can use form CA9176 to apply for Class 3 National Insurance credits from April 6, 2011, if they've provided care for a child aged under 12.