Senior workers are holding off retirement and cashing in pensions for their own children
The Taxpayer’s Alliance may be pushing for an end to winter fuel allowances and senior bus passes, but researchers at Investec have hit back with their own study, claiming that the elderly are already suffering because they’re giving too much of their pension pots to their grandchildren.
The study claims that parents and grandparents who gift money to their grown-up children and grandchildren say they risk compromising their own standard of living by being overgenerous.
Grandparents and parents in London and the South East are on average the most generous while those in Wales gift the lowest amount.
Around a third of parents and grandparents over 55 say that they plan to or already give cash hand-outs to their descendants at an average rate of £5,026 a year.
However,18 per cent think they’re giving away too much, and 11 per cent admit to having had to cut back on holidays, clothes, dining out and the weekly shop in order to afford their generosity.
Three per cent of older workers even said they’re delaying their retirement to fund their kids and grandkids’ handouts.
Chris Aitken, Head of Financial Planning at Investec Wealth & Investment said: “It’s understandable that many grandparents want to give their grown-up children and grandchildren a helping hand financially, particularly with big ticket items such as house deposits and education fees.
“It is a concern that recent pension freedoms could result in some grandparents gifting too much of their retirement pot without considering their potential longevity. Anyone considering using their pension pot in this way should seek financial advice first.”
The study from Investec couldn’t be better timed; it comes after a director at think tank the Taxpayers’ Alliance said that ministers should waste no time to make unpopular cuts to pensioner benefits.
Many of those hit by a cut to the winter fuel allowance might "not be around" at the next election, said Alex Wild of the Taxpayers' Alliance.