Forget the headlines about post–pension freedoms with retirees spending their nest egg on a Lamborghini – new research shows that 2.4 million UK grandparents* have either withdrawn money from their pension to support their grandchildren or plan to in the future.
According to new research from LV=, a quarter of generous grandparents who have already given away money to their grandchildren* have taken the funds from their pension. A further one in six plan to use their pension for this reason once they reach retirement age.
Open-handed grandparents are willing to give away substantial amounts to their grandchildren, whether from their pensions, savings or wages, with the average grandparent having already spent £1,633. More than one in twenty have given gifts of more than £10,000.
The generosity shows no sign of stopping, with many grandparents (56%) planning to give away even more money in the future. The average grandparent expects to give away £2,938 in the coming years, with charitable grandmas expecting to give away £173 more than granddads on average.
Pension savings are used to help with a wide range of things, from helping grandchildren get on the housing ladder to other high-ticket items such as university fees or cars. A similar number would help out with more day-to-day expenses like bills and hobbies.
Grandparents often view the financial gifts they make as a ‘living inheritance’, with more than a third wanting to be around to see their grandchildren enjoy the money**.
With one in five retirees using their pension to help out, it’s important to plan for retirement and have enough money left for yourself, as even smaller outgoings such as bills can become harder to meet later in life, as well as the flexibility to access your money.
Being the generous generation can have its downsides
The desire for grandparents to help grandchildren is part of human nature. But being the generous generation can have its downsides – with greater longevity and increasing costs of care in later life, some retirees may find they have given away too much. If this is something you are considering, speak to us first to review your options.
Source: According to ONS Population Pyramid, there are 49,533,900 people aged over 18 in the UK. The research found that 39% of a sample of 2,002 adults were grandparents, indicating there are 19,318,221 grandparents in the UK. 56% of grandparents have helped or plan to help their grandchildren, and 22% of these would use their pension to do so. Therefore, 2.38 million grandparents have helped or plan to help their grandchildren, using their pension.
* According to research carried out by Opinium Research on behalf of LV=, 25% of grandparents have already taken money from their pension to give to their grandchildren.
** Statistics from research carried out on behalf of LV= by Opinium Research in June 2014 (total sample size = 2,043). The press release for this research was issued on 20 June 2014.
The research was carried out by Opinium Research from 13–16 October 2015. The total sample size was 786 British grandparents over the age of 30, and the survey was conducted online. Results are weighted to nationally representative criteria