New rights for unpaid carers
People who take time out of work to be unpaid carers will be able to continue building up their state pension entitlement through the introduction of new carer’s credit.
From 6 April 2010, new credits will be awarded to carers who previously didn’t earn enough to make regular national insurance contributions – which determine state pension entitlement.
Currently, people who spend 35 hours or more a week caring for someone who is disabled are able to build up their state pension entitlement through a taxable benefit known as carer’s allowance.
However, the new credit system will help people who spend less than 35 hours a week caring for someone.
It’s hoped that the new system of credits will help carers build up a basic and second state pension by combining existing national insurance contributions and credits earned when not working.
Angela Eagle, the minister of state for pensions and ageing society, says the changes will be fairer and more generous to people who take time out from working - and therefore neglect their pension pots.
“The state pension is everyone’s foundation of financial security in later life and therefore, it’s only right that caring for others should be counted towards it,” she explains.
Eagle asks anyone who looks after someone ill, disabled or a family member to come forward and check their eligibility for the government’s carer credits: “We want people to tell us if they, or people they know, are looking after somebody for more than 20 hours a week so they benefit from this change.”
Details on how to apply - and exact terms of eligibility - will be available of the DirectGov website nearer to the time.
Only 19% of carers regularly pay into their savings, according to an Ipsos MORI survey. Meanwhile, 36% admit to dipping into their savings as a result of caring.
People eligible for the new carer credits must spend at least 20 hours a week caring for someone whose need for care is certified by a health or social care professional, or for someone who receives attendance allowance, constant attendance allowance or disability living allowance.
This means that, even if an elderly person refuses to claim attendance allowance, their son or daughter (or an unrelated carer) who spends at least 20 hours a week doing their shopping, cleaning or cooking can still claim the national insurance credits.
Parents will also be able to take advantage of the carer credits if they are foster carers or receive child benefit for children below 12 years of age. Replacing home responsibilities protection, the new credits will be awarded on a weekly basis and can be combined with paid contributions that were made when working.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.