A record number of grandparents and family members are applying for a little-known Government scheme that can add thousands to their state pension, new data has revealed.

The scheme called specified adult childcare (SAC) credits, allows relatives who provide childcare for children under 12 to receive valuable national insurance (NI) credits.

These credits count towards building qualifying years for the state pension, meaning those who care for grandchildren or other family children can increase their future retirement income.

According to fresh figures obtained by Quilter via a Freedom of Information (FOI) request, applications for SAC credits have soared in recent years.

Between October 2023 and September 2024 alone, 42,964 people applied for the scheme – a 43 per cent increase on the previous year and more than double the number seen four years ago.

Over the last five years, a total of 131,594 applications have been submitted, with 104,433 approved.

This surge highlights a growing awareness among families of the financial benefits tied to informal childcare arrangements, the wealth management firm said.

Grandparents who might not be working or making NI contributions can build up their pension entitlement by transferring unused child benefit credits from the working parent to themselves.

Jon Greer, head of retirement policy at Quilter, explained the significance and said: “Applications for specified adult childcare credits are surging as more families catch on to the fact that looking after grandchildren doesn’t just help with childcare but can also boost your retirement income.”

How SAC credits boost your state pension

The scheme works by allowing grandparents or other family members who provide informal childcare for children under 12 to receive NI credits.

These credits count toward building qualifying years for the state pension.

When the child’s parent or main carer is working and paying into the NI system, the extra credits associated with the child benefit claim can be transferred to the family member providing care. This is an opportunity many might not realise exists.

Each year of transferred credit currently adds £330 in extra state pension income for 2025/26, which could translate into nearly £6,600 over a 20-year retirement.

That is a significant boost for grandparents who dedicate time to childcare without formally being employed or receiving payments.

Mr Greer said: “Many eligible grandparents could be missing out on thousands of pounds simply because they don’t realise they qualify or how to apply.”

Who qualifies and how to apply

To qualify for SAC credits, applicants must be family members such as grandparents, aunts, uncles, or older siblings providing care for a child under 12.

The parent of the child must receive child benefit and agree to transfer the credit. The applicant must also be under state pension age, currently 66.

Only one credit can be transferred per child benefit claim, so if a grandparent looks after two grandchildren in the same household, only one credit applies.

Applications can also be backdated as far back as April 6, 2011, offering a chance to claim credits from previous years if eligible.

Why some applications are declined

The main reasons for rejected applications include applicants already having a qualifying NI year through work or other credits, or being the recipient of child benefit for the child themselves, in which case the credits are automatically applied.

Mr Greer called for greater Government outreach to improve awareness.

He added: “We would welcome a renewed effort by the Government to raise awareness of these credits, particularly among lower-income families and communities where gaps in NI records are more common.”

How to apply for the credits

People can apply by completing form CA9176 through the Government website here.

You must wait until 31 October after the end of the tax year you want to apply for as the Government will want to check the parent or main carer already has a qualifying year for NI purposes.