More grandparents funding childcare

Families are increasingly draining grandparents’ pensions to subsidise costs of childcare and debt repayment, according to new research by engage Mutual Assurance.

Despite growing concern over a pensions shortfall, and women feeling increasingly compelled to return to work to ensure financial security, the research reveals that the percentage of retirees subsidising their grandchildren’s care has more than doubled in the last three months - more than one in five (21%) retired grandparents contributing to childcare costs in the six months preceding October, compared to one in ten (10%) in July.

Furthermore, regardless of reports of increasing indebtedness in retirement, the proportion of retired grandparents helping their grown-up kids pay off debt in the last six months increased from 16 to 20 percent between July and October.

As part of its 3GB campaign, engage Mutual Assurance asked a GB representative sample of 4,500 adults how they had supported family members financially in the last three months. The results reveal how financial dependencies are tying generations together, grandparents providing invaluable support to the younger generations.

Grandparents Helping Parents

Overall one in two (50%) grandparents have subsidised the costs of bringing up their grandchildren in the last six months, with one in five (20%) contributing to cost of childcare.

The most common forms of financial support provided by grandparents are helping with childcare costs (20%) and debt repayment (20%).

Almost one in five (19%) of grandparents have helped their grown up children cover the costs of their family home, assisting with mortgage repayments, deposits on a new home or funding home improvements.

With previous research by engage Mutual Assurance revealing that one in five (20%) parents have no idea how they’ll afford their children’s higher education, this research reveals that four percent of grandparents helped to cover education costs in the last six months.

The proportion of working grandparents subsidising childcare in the last six months has remained constant at 18 percent between July and October.

Despite increases in those liable to pay inheritance tax, just three percent of grandparents have given their grown-up children a stake in their house in order to avoid inheritance tax.

Regionally, Grandparents in the South are most likely to be contributing financially towards younger generations, 28 percent helping to cover the cost of childcare in the last 6 months, compared to 20% nationally, and 29% helping their grown up children to pay off debts compared to 20% nationally.

Returning the Favour

Despite reports that OAPs are finding it increasingly difficult to meet rising costs of living, it would appear that younger generations are not returning the favour. Just five percent of Britons with retired parents have helped to pay their utility bills in the last six months, seven percent giving them money to supplement their pension.

Karl Elliott, 3GB spokesperson for engage Mutual Assurance commented: “With money issues becoming an increasing concern in modern Britain, this research shows the important role families play in providing financial security. Despite concern that old age pensioners are unable to afford retirement, grandparents continue to make a valued contribution to extended family finances.

“Child Trust Funds offer grandparents, as well as parents, an opportunity to contribute financially to their grandchildren’s future. Our research shows that seven percent of grandparents have made a one off payment into their grandchild’s CTF, making an investment which will help to secure their grandchild’s financial independence once they reach adulthood.”