The unprecedented cost of being a grandparent

{"text":[[{"start":5.55,"text":"It started with small things. A teething-ring or a sleep suit left lying around here and there in our otherwise spotless house. My wife and I were expecting our first grandchild and we began to gravitate to the baby aisles in supermarkets and drift into shops selling items for children. It was exciting and we enjoyed looking at things that we hadn’t since our children were very small."}],[{"start":28.400000000000002,"text":"Then Leo arrived on a sunny, spring day, bonny and bouncy, a healthy baby boy, and we were caught up in the exhilarating emotions of a new birth — a mixture of relief and intense joy. The unspoken fears that something might go wrong extinguished."}],[{"start":44.95,"text":"Three years on and four grandchildren later, the delight and pleasure from having them hasn’t faded; watching them develop their own personalities is the best thing in the world, reminding us of the pride and happiness we felt when our children were young."}],[{"start":60.550000000000004,"text":"These were emotions my wife and I hoped for and quietly expected. What we hadn’t foreseen were the expenses. "}],[{"start":68.5,"text":"Sky-high property prices, the rising cost of living and a difficult graduate jobs market have increased the need for us to help out: nursery fees, money towards a family car for one son, help with the rent for a bigger home for the other, and the opening of savings accounts for each grandchild. We were happy to pay these bills, but they were unanticipated."}],[{"start":88.65,"text":"They may also be unprecedented, say researchers. Across the UK, grandparents spend an estimated £14.6bn a year to provide support, according to research conducted in April and May by fintech Creditspring. This is money used for fuel, food, clothes, toys and activities while they look after their grandchildren."}],[{"start":109.75,"text":"“It’s an eye-watering figure. And it underlines the huge hidden role grandparents play in keeping family finances afloat,” says Tamsin Powell, consumer finance expert at Creditspring. “But this support is not cost free.”"}],[{"start":124.1,"text":"The company, which interviewed more than 1,000 grandparents, said 70 per cent of those who provide childcare found it more expensive than a year ago, while 44 per cent said they had cut back on their own spending to cover the costs."}],[{"start":139.35,"text":"Other surveys confirm the financial pressures. One from Moneysupermarket in March estimated that regular financial support from grandparents on average amounted to more than £37,000 from birth to age 18. Another, conducted last December and January from wealth manager Saltus, found that wealthy grandparents were spending £1,591 on adult grandchildren every year — leaving 39 per cent anxious about money."}],[{"start":167.7,"text":"It is little wonder that grandparents have been called the economy’s “reserve army”. "}],[{"start":173.75,"text":"Mark Screeton, chief executive of SunLife, describes them as becoming “part of the UK’s informal childcare infrastructure”. "}],[{"start":182.1,"text":"The insurance group carried out research last year, which found that one in four grandparents thought their children couldn’t cope financially without their help, while one in five said they were relied upon more than they anticipated. "}],[{"start":195.25,"text":"“Grandparents are increasingly important for families,” says Screeton, who has two grandchildren himself, aged nine and five. “But we can’t walk past the fact that they themselves will also probably be suffering the cost-of-living challenges that all of us face.”"}],[{"start":211,"text":"My wife Sam captures our conflicting emotions. “It’s the best ever feeling knowing you have these gorgeous little people in your lives. You want to do everything you can to make them as happy as possible. But I don’t think it ever occurred to me that there would be such a financial burden. I say that carefully because they are not really a burden, but there is this financial demand put upon us, because we feel almost duty-bound to help as much as we can.”"}],[{"start":236.55,"text":"Some grandparents can feel resentful. Jennifer is a 56-year-old schoolteacher with four grandchildren who lives in Oxfordshire. “My husband and I have repaid our mortgage and he still works in the City, so we do have some money spare, but one of my sons expects us to help pay for things for his children all the time,” she says. “The number of text messages I get hinting that he needs this or that is very wearing.”"}],[{"start":null,"text":"

---

"}],[{"start":260.75,"text":"Recent tax changes have complicated the issue. The introduction of VAT on private school fees, as well as capital gains tax increases and the inclusion of pensions within the scope of inheritance tax from April next year, have made financial planning more important for grandparents, say wealth managers and advisers.  "}],[{"start":277.7,"text":"The new pension laws, which will turn one of the most tax-efficient vehicles for passing on wealth to one of the least, have prompted increasing inquiries from grandparents for advice as they rethink how they should protect the transfer of assets from the tax authority."}],[{"start":292.95,"text":"Many grandparents are part of the so-called wealthiest generation of baby boomers, born between 1946 and 1964, who benefited from rising property values and defined benefit “golden” pensions. Consequently, they are often the most affected by new tax laws."}],[{"start":309.84999999999997,"text":"“We have an entire generation in the later stages of their life who are asset rich in terms of property, investment and pensions,” says Kirsty Stone, partner at financial advice firm The Private Office."}],[{"start":null,"text":""}],[{"start":323.09999999999997,"text":"“Many grandparents want to use this money through gifting to help their children raise their children, which means money is feeding through into the economy rather than sitting in savings or other assets.”"}],[{"start":335.15,"text":"Some have decided to cash in their 25 per cent tax-free lump sum and gift early. This can be taken at the age of 55, rising to 57 in 2028. Others are considering switching money into Junior Isas or Sipps. There are also increasing inquiries about bare trusts, often used for school fees, and tax-efficient offshore bonds. "}],[{"start":358.59999999999997,"text":"“I have to think about gifting to my children and grandchildren as early as possible to give them as much as I can, now pensions are going to drop into the tax net,” says Dan, a “young boomer” at 62 who is considering a combination of Isas, bare trusts and offshore bonds to help shield his money from tax."}],[{"start":377.49999999999994,"text":"By gifting early, the grandfather of four, who works for a global advertising company, is more likely to meet the seven-year rule — where any gift of cash, assets or property falls outside the scope of inheritance tax as long as the person lives for seven years after it has been given."}],[{"start":393.8999999999999,"text":"Dan says he has spent about £100,000 on each of his children and plans to do the same soon for all his grandchildren."}],[{"start":401.8499999999999,"text":"“In many ways, it is much tougher for young people today,” he says. “It’s not impossible to get on the property ladder, but it is so much harder. It’s down to the grandparents and parents to help. My kids have good jobs, so it’s the grandchildren who I want to help now.”"}],[{"start":417.1499999999999,"text":"“Financial challenges are far greater than in my day,” says Ian Mackrell, an 82-year-old retired banker. He and his wife Renate, 84, have spent £250,000 on each of their three grandchildren. “With the cost of property and few jobs that offer security for life, I can’t see how many children will get on unless they have the support of parents and grandparents.”"}],[{"start":439.24999999999994,"text":"The couple used savings accounts and bare trusts for their grandchildren. When money for a bare trust is funded by a grandparent, any income or capital gains are taxed at the child’s rate."}],[{"start":null,"text":""}],[{"start":null,"text":"

---

"}],[{"start":451.74999999999994,"text":"For Gen Z and millennials with children, support from grandparents can provide much-needed security."}],[{"start":457.79999999999995,"text":"My younger son, Harry, 29, who has three children, says it has been an “absolute lifeline”. The money from us helped him buy a new car, essential for his job as an electrician, after the old one broke down. “Without the car, I’m not sure what I would have done.”"}],[{"start":473.79999999999995,"text":"His brother Jacob, 33, who has one child, says that with so many bills, the extra help has been a “godsend”. “My rent is very high, I have a Plan 2 student loan and so much other stuff I need the money for,” he says. “I’ve always wanted to pay my own way and do everything on my own, but that extra help from mum and dad has gone a long way.”"}],[{"start":495.15,"text":"Financial planners warn grandparents that they must make sure they can afford to gift when considering investments for grandchildren, as increasing life expectancy and the cost of care can lead to financial difficulties in old age."}],[{"start":508.4,"text":"“We are seeing a much more aggressive transfer of generational wealth,” says Stone of The Private Office. “Grandparents need to ask: can they support the next generation without jeopardising their own financial stability?”"}],[{"start":521.9,"text":"“Many people now spend three decades in retirement,” adds Emma Sterland, chief financial planning officer at Evelyn Partners. “It is really important not to overcommit. Committing to pay school fees for five sets of grandchildren, even two, is a massive number.”"}],[{"start":null,"text":""}],[{"start":538.4499999999999,"text":"Henrietta Grimston, chartered financial planner at Saltus, says: “We’ve had a bit of a double whammy. VAT on school fees and pensions dropping into estates have spurred a lot of conversations on what to do with excess funds. That might be a gift that is not subject to tax after seven years, or by giving excess income through regular payments.”"}],[{"start":559.05,"text":"Regular payments are not on a seven-year clock as with outright gifting, but they must be consistent and from surplus income to gain tax exemption. The first £3,000 that you give is also tax-free in any given year."}],[{"start":572.55,"text":"“Grandparents need to be clear about what they are trying to achieve with gifting,” says Sterland. “Some people think the greatest gift is to support their grandchildren through private education. But if their children can already afford to pay, then they might want to put the money towards university or to help them buy their first house. If it is school fees, it might be advisable to use excess income. If it is a big lump sum for a property and it is a younger grandparent, an outright gift might be better.”"}],[{"start":600.65,"text":"Although many grandparents are increasingly concerned about tax and the financial future of their families, what came across most strongly in interviews was the emotional connection to their grandchildren."}],[{"start":611.55,"text":"“I gave a lot of money for school and university fees for the grandchildren, but the time spent with them has given me so much. That was so precious. They are worth every hour and every pound I’ve spent,” says Anne Ridgeway, a 78-year-old grandmother of three, who lives near Durham."}],[{"start":628.15,"text":"After sifting through all the research, one figure stood out for me, even though it might not be headline-grabbing or controversial. This was the more than 80 per cent of respondents in SunLife’s August survey who expressed genuine joy at looking after their grandchildren."}],[{"start":644.4499999999999,"text":"Stuck in a four-foot square playhouse last weekend with three small children in a “misguided” hide-and-seek game at Leo’s third birthday party, I did question the joy of being a grandparent. "}],[{"start":655.5999999999999,"text":"Was I genuinely having fun looking after them? I have to confess I wasn’t sure. But, if nothing else, I figure they owe me: I paid for the playhouse, so they can pay for the care home when the time comes."}],[{"start":null,"text":""}],[{"start":673.8999999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779586756_7054.mp3"}