10th November 2015
Forget the rumours of retirees gearing up to blow their nest-egg on fancy cars or expensive holidays as new research shows that 2.4m UK grandparents have either raided their pension to support their grandchildren, or plan to in the future.
According to an analysis from retirement specialist LV=, 25% of grandparents who have already given away money to their grandchildren have taken the funds from their pension.
In addition, a further 16%, 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.
But worryingly, around 6% have actually given gifts of more than £10,000.
The generosity shows no sign of stopping either with the majority, at 56%, planning to give away even more money in 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.
Since the new pension freedoms went live in April, it appears savings are being used to help with a wide range of things, from helping grandchildren get on the housing ladder and other high-ticket items like university fees or cars.
But a similar number would help out with more day-to-day expenses such as bills and hobbies.
Grandparents often view the financial gifts they make as a ‘living inheritance’, with more than a third, at 37%, wanting to be around to see their grandchildren enjoy the money.
John Perks, managing director of retirement solutions at LV=, said: “It’s heart-warming to see grandparents so willing to help out their grandchildren both day-to-day and with large ticket purchases.
“With one in five using their pension to help out, it’s important these kind individuals plan for their retirement and have enough money left for themselves, as even smaller outgoings like bills can become harder to meet later in life, as well as the flexibility to access it.”