Grandparents and other eligible relatives who provide childcare for children under 12 can apply for free National Insurance credits that may increase their state pension by approximately £359 per year. These credits are available even with no minimum hours requirement, provided the child's parent confirms care was given and does not need the credit for their own National Insurance record.
The initiative is particularly relevant as summer holidays approach, a time when many grandparents take on additional childcare responsibilities. Financial services firm Quilter noted that between 2016 and 2025, approximately 160,000 successful claims for these annual credits were made by grandparents or other family members. However, over 40,000 applications were rejected during the same period.
Understanding the Credits
Rejections commonly occur when a grandparent already has a qualifying year of National Insurance contributions, often due to continued employment or other credits, or if the parent is already benefiting from the credits. Jon Greer, head of retirement policy at Quilter, stated that for those who have taken time out of work for childcare, these credits can significantly enhance retirement income, especially compared to the cost of voluntary contributions, which can exceed £900 for a single year. He added that these credits offer a straightforward method for grandparents to strengthen their state pension entitlement while assisting their families with childcare.
The boost is specifically for caring for children whose parents are working and do not require the credits for their own state pensions. The current full state pension stands at £241.30 per week, or nearly £12,550 annually. Each grandparent credit increases state pension entitlement by 1/35th, equating to about £6.90 weekly or £359 annually. Over a 20-year retirement, this could amount to approximately £7,200 before tax.
Retrospective claims for these credits can be made for years stretching back to 2011. This is beneficial for individuals who are close to meeting the minimum 10 years required for any state pension or the 35 years needed for the full rate. Other qualifying reasons for free National Insurance credits include unemployment, disability, or caring for adults.
In comparison, purchasing state pension top-ups costs £17.45 weekly or £923 for a full year at the 2025/26 rates, with eligibility for backdating limited to the past six years.
Application Process
Formally known as 'specified adult childcare credits,' applications can be submitted from October 1st in the year following the tax year for which the claim is made. A parent must have registered for child benefit, though they do not necessarily need to receive payments. They can opt for a 'credits only' claim if one partner earns over the £60,000 threshold. Crucially, the parent must not require the credits for their own state pension, which is common when they return to work and make their own National Insurance contributions.
It is advisable for all families to claim child benefit, even if earnings exceed the £60,000 to £80,000 range, as a 'credits only' option can be selected on the form to avoid annual tax return filings. The government plans to allow parents to rectify gaps in their state pension records from April 2027 if they did not claim child benefit previously.
Only one eligible relative can apply for each available National Insurance credit for childcare. The credits are designated for those under pension age, as they contribute to future state pension entitlement. The transfer of these credits does not incur any cost to the working parent. Eligibility is confirmed if the parent claims child benefit or opts for the 'credits only' status, allowing the spare credits to be signed over. While grandparents are the most common recipients, aunts and uncles are also eligible to apply.