Grandparents win pension rights for caring for grandchildren

Grandparents who give up work to look after their grandchildren will no longer lose out on the basic state pension from April 2011, following a consultation on changes to national insurance credits launched by the government today. The proposal, if introduced, would benefit around 250,000 grandparents. Currently, working-age grandparents can miss out on retirement money if they stop working before building up enough national insurance credits to get a full basic state pension. The Department for Work and Pensions said that, on average, people become grandparents for the first time at age 49 and often give up work to provide childcare to a grandchild. The credit, aimed at anyone who is providing care for a young relative under the age of 12, will be added to an individual's national insurance contributions record and count towards their basic state pension. As of April 2010, 30 years of NI contributions are needed to qualify for the full basic state pension. Minister for Pensions Steve Webb said: "I have supported the idea of a Grandparents' Credit for many years. For too long the vital childcare that grandparents provide so that parents can work has been overlooked by the system. "It is about time that we protect the pension rights of grandparents, many who are in their early 50s and giving up work early to provide vital childcare. Parents of children under 12 and carers receive a credit towards their basic state pension so it makes sense to extend this to grandparents of working age too." Sam Smethers, chief executive of national charity Grandparents Plus , said: "We warmly welcome the introduction of the Grandparent national insurance credit. We know that working age grandmothers on low incomes provide a substantial amount of childcare. Until now they have done so with the risk that they could miss out on a full basic state pension. "This is also an important victory for the principle that grandparental childcare does count and should be recognised. We believe it has implications for other areas of government policy." The government is also proposing to bring to an end NI credits for the tax year in which people reach age 16 and the two following tax years (known as "starting credits") to have effect from 6 April 2010. This is expected to prevent youngsters from overseas working in the UK for a couple of years before claiming a partial pension for life, years later. The government said that a small number of young people, currently below the age of 18, may be hit by the removal of starting credits. These are people who marry or form a civil partnership (and have responsibility for children) and whose spouse or civil partner dies relatively early in their working life. In order to get the full amount of widowed parent's allowance, there is a condition that 90% of the "working life" is covered by qualifying years of NI contributions or credits. If starting credits are abolished, this demographic may find their state pension entitlements affected. The government would therefore like to hear from the bereaved (to see how government should protect people whose entitlement to bereavement benefits may be affected as a result of the demise of starting credits), as well as childcare providers (to help define who should be included in the list of adult family members who provide familial child care). The consultation begins today and runs until 26 November 2010.