Could grandparents benefit from pension-boosting tax credits?

No, not here. But in the U.K., a plan actually exists that provides grandparents taking on the care of their grandchildren with national insurance credits toward state pensions.

Known as the “grandparents’ credit”—officially as “specified adult childcare credits,” the British plan was kicked off in 2011 as a means of preventing working-age grandparents from losing a year of state pension rights if they take off a year to care for a grandchild under the age of 12.

According to The Guardian, that lost year could cost grandparents “1/35th of the full rate of state pension, which is £231 per year. Over the course of a 20-year retirement this would add up to a loss of more than £4,500.”

But the government intervened with the credit, in a program that allows a mother going back to work after the birth of a child to complete paperwork allowing a grandparent or other family member to receive national insurance credits for looking after the child.

The program isn’t well known even in the U.K., with a former minister criticizing how poorly it’s been advertised—so poorly that only “1,298 grandparents and other family members across the country benefited in the year to September 2016,” the report said.

But still, they’re ahead of the U.S., which makes no provision at all for caregivers to be credited with time toward Social Security if they leave paid work to take care of a family member.

Former Liberal Democrat and member of Parliament Steve Webb is now director of policy at mutual insurer Royal London, which estimated that, based on an analysis of official data, approximately 1.27 million working mothers, with one or more children under 12, were relying on a grandparent to provide childcare.

Of these mothers, the report said, approximately 230,000 were in their twenties, likely with the grandparents below state pension age. Some, the analysis concluded, would still be working and not need the credit, but even if only half were eligible to claim the credit, that would total more than 100,000 potential beneficiaries.

U.S. workers already have a tough time saving for retirement. Caregivers have a tougher time, female caregivers the toughest of all given the time they’re out of the workforce in raising children or in caring for other family members.

Not only might a program like Britain’s offer mothers a chance to go back to work, thus reducing the years lost in the workforce and increasing their own Social Security credits—as well as their financial stability—but it would provide grandparents or other family members the option to provide care without jeopardizing their own retirement security.

As a new administration takes over, perhaps it’s an idea worth considering.

Instant Insights /

What if workers who had to quit their jobs to be caregivers could get tax credits?

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