Pensioners' savings to give grandchildren a head start in life
TODAY’S generous grandparents are saving harder than ever to give their grandchildren a head start in life.
Pensioners are giving their savings to their grandchildren
More than half plan to help fund their grandchildren’s future with an average gift of £10,225, according to savings specialist Scottish Friendly.
Grandparents hope the windfall will help loved ones fund the cost of getting on the property ladder or reduce the impact of university fees.
They are keen to help despite today’s rock-bottom savings rates, with one in three setting aside money in cash.
Younger generations face unaffordable house prices
The average easy-access cash individual savings account (ISA) currently pays just 0.82 per cent, only marginally above the 0.6 per cent rate of inflation, according to MoneyFacts.co.uk.
Calum Bennie, savings specialist at Scottish Friendly, said another obstacle is that grandparents cannot set up a tax-free Junior ISA on behalf of their grandchildren, only parents or guardians can do so: “This is creating real frustration among grandparents who have to coerce parents into opening a savings pot.”
Grandparents want to help grandchildren cover university fees
Scottish Friendly’s My Choice ISA allows grandparents to save tax-free for their grandchildren in cash, shares and bonds, using their own allowance.
Patrick Connolly, certified financial planner at Chase de Vere, said: “Younger generations face huge university debts and unaffordable house prices.”
Grandparents are likely to achieve better returns by investing in stocks and shares rather than cash, and by picking low-cost products, he added.