State Pension is a benefit based on national insurance contributions and Carer’s allowance is not. There are other benefits based on national insurance contributions e.g contribution based Employment and Support Allowance and Job Seeker’s allowance or Maternity allowance. Carer’s Allowance isn’t based on national insurance contributions but is assessed against income.
Carer’s allowance is given to people who care for 37.5 hours per week or more. There is no legal definition of caring, so spending time with somebody, taking them shopping, even just providing social interaction, is considered caring. The people receiving care need to be disabled, which means they need to be in receipt of a qualifying benefit - DLA with middle or higher rate care, Attendance Allowance, PIP or CDP/ADP. If they do not receive any of these the DWP does not consider them disabled. You are allowed 4 weeks paid breaks in care per year for holidays, with a further 8 weeks entitlement if the disabled person is admitted to a local authority funded care home or hospital (although the qualifying benefit will be suspended after 28 days and so Carer’s allowance will also stop). Underlying entitlement to Carer’s allowance can give you entitlement to other things that you’ll need to discuss with your local council.
Carer’s allowance is assessed against income from employment and self-employment, but not income from investments like dividends or rental income from tenants under the condition the property was not initially bought with the intention to rent it out e.g with a buy to let mortgage. Contribution-based benefits are considered as income and are taxed. Income based benefits will reduce the rate of Carer’s allowance paid or wipe it out completely.
The rate of Carer’s allowance is abysmal and given it is intended to compensate people with caring duties who have had to decrease hours and give up work it is woefully underpaid. You would have to work less than approx 15 hours per week and earn minimum wage to be eligible for approx £80 from the state as compensation per week.
Long story short you lose Carer’s allowance because your basic rate of State Pension exceeds the rate of Carer’s allowance - you can’t receive income from the state for Carer’s allowance and State Pension (or other contribution based benefits) beyond the rate of that benefit. In the hierarchy of benefits, State Pension is at the top so that gets priority. CA is topped up to the max rate for CA if SP is paid below CA, but that’s it.
Entitlement to SP is based on the number of qualifying contributions made at the lower earnings limit. Class 2 contributions count as 1 contribution at the lower earnings limit. There’s no connection between the national insurance contributions you pay and the rate of Basic SP you receive other than the number of qualifying contributions you have made through your working life - the value of those contributions above the lower earnings limit can increase other components of state pension but not the basic rate. The basic rate of SP is a benefit based on the basic number of qualifying years you have made qualifying NI contributions. If you have been receiving Carer’s allowance then you have been earning tax credits that count as a qualifying year regardless of how much tax you pay on your income….hence entitlement can’t overlap.