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04

Parents under pressure as pensions plummet

Open-access content Wednesday 24th April 2013

Four out of ten people retiring this year will still be providing ongoing financial support to their children and grandchildren, according to a study published today by the Prudential.

Support levels are highest in London (52%) and Wales (49%), but parents and grandparents across the UK are facing difficult decisions as they struggle with reduced pension pots.

The study suggested that retirees provide an average of £240 a month to dependants, although 11% hand over more than £500. This is for everyday living expenses as well as big-ticket purchases like holidays, TVs and cars.

'Issues in the housing and jobs markets clearly make it financially difficult for adult children to leave home, and most parents are happy to support them where possible,' said Vince Smith Hughes, a retirement expert at the Prudential.

'If they can afford the support there is no issue, but with expected retirement incomes at a five-year low any additional outgoings could cause financial strain.'

Prudential's research shows that the value of pensions has plummeted. Those retiring in 2013 expect average incomes of £15,300 compared with an expectation of £18,700 in 2008.

'While supporting the family will always be a priority, it is important for people also to focus on their own comfort in retirement,' added Smith Hughes.

Almost a sixth of this year's retirees have children under the age of 25 living at home, while 13% have children aged 25 and over staying with them. Around 3% share their homes with their grandchildren.

The study showed that 11% of people retiring this year currently help out with dependants' household costs, like energy or phone bills, while 10% give money to support their grandchildren's upkeep.

This article appeared in our April 2013 issue of The Actuary.
Click here to view this issue
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04
Topics:
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