Never mind the bank of mum and dad: Grandparents now paying £647million a year to subsidise needy grandchildren

  • 20% of grandparents aged 50 or over give money to their grandchildren
  • 4% now contribute to Child Trust Funds (CTFs)
  • Those who give are more likely to be homeowners than renters
  • 80- to 84-year-olds gave the highest amount on average

By Daily Mail Reporter

Published: | Updated:

Forget the 'Bank of Mum and Dad' - grandparents are subsidising their grandchildren to the tune of more than half a billion pounds a year, according to a new study.

Researchers found a fifth of grandparents in England aged 50 or over give money to their grandchildren, and the figure totalled £647 million in 2010.

Grandparents who give are more likely to be homeowners than renters and more likely to have lower or no mortgage debt, according to the research.

Helping hand: A fifth of grandparents in England aged 50 or over give money to their grandchildren, and the figure totalled £647 million in 2010

Helping hand: A fifth of grandparents in England aged 50 or over give money to their grandchildren, and the figure totalled £647 million in 2010

The study by the International Longevity Centre-UK (ILC-UK), supported by Key Retirement Solutions and Partnership, highlights how grandparents are playing a vital role in supporting future generations.

The report - Grandparental Generosity - looks at the levels and patterns of financial support from grandparents using the 2010 English Longitudinal Study on Ageing (ELSA).

Just under 2.5 million grandparents in England aged 50 or older gave money to their grandchildren.

Contributions to Child Trust Funds (CTFs), tax-free savings accounts for children available from 2005-2010, were made by one in 25 grandparents (3.99 per cent).

Grandparents who give are more likely to be homeowners than renters and more likely to have lower or no mortgage debt

Grandparents who give are more likely to be homeowners than renters and more likely to have lower or no mortgage debt

Across England, grandparents gave a cumulative total of almost £333.8 million to their grandchildren in 2010. Almost £313.8 million was contributed to CTFs.

Seventy five to 79 year olds gave more than from any other age group, but 80 to 84-year-olds gave the highest amount on average.

Grandparent givers are also more likely to provide care for their grandchildren, and be female and married rather than separated or divorced. Grandparental givers are wealthier than non-givers.

The research reveals that grandparent givers are typically well-off and are likely to have substantially higher incomes from private pensions. Degree holders gave a much larger amount on average compared to the other groups.

Brian Beach, research fellow at ILC-UK, said: 'This research reveals that millions of grandparents are providing financial support to younger generations.

'For grandchildren, these transfers are likely arriving at a crucial transition point, impacting educational and housing opportunities.

'As people live longer and society ages, grandparental giving may have an increasingly important impact on the social mobility of grandchildren.'

Ged Hosty, managing director of Equity Release at Partnership, said: 'As families become increasingly financially stretched and time-poor, grandparents are stepping in more and more to provide support.

'However, while this trend is to be welcomed as it helps to draw families closer together, it can put a strain on the grandparents finances that they may struggle to recover from.

'Therefore, it is vitally important that people consider all their assets - including their homes - ahead of retirement and take steps to ensure that they can provide as much help as needed without detriment to their own retirement aspirations.'

Dean Mirfin, group director at Key Retirement Solutions, said: 'It is evident that with extended generations increasingly amongst today's population that grandparents are opting to help with their grandchildren, not just in terms of time but also financially.

'Grandparents in many cases are taking a pragmatic view with regard to this financial support seeing it as inheritance at a time when money is needed most or has the potential to most influence the financial well-being of the rest of their families.

'For many being there to witness the impact of their support is a key driver to gift at the right times, and to direct how that support is used, and this is a trend we expect to see continue.'


Most watched News videos