Over half of Grandparents plan to save for their Grandchildren

  • Majority of grandparents (51.2%) plan on saving for their grandchildren’s future and expect to leave them £10,225

  • Despite rock bottom savings rates, just under a third of grandparents (31.3%) plan on, or are already using, a cash accounts to save for their grandchildren

  • Scottish Friendly to help grandparents save for their grandchildren without the hassle of nagging parents to open a Junior ISA

More than half of UK grandparents plan to save for their grandchildren’s future – with many hoping to help their loved-ones onto the property ladder, it has been revealed.1

Some 51.2% said they would leave money aside for their grandchildren, with an average expected gift of £10,225, according to a survey by savings and ISA provider Scottish Friendly.

And just under a third of grandparents (31.3%) will do so using cash, whether through a traditional savings and account or in a cash ISA.

Scottish Friendly commissioned the poll to coincide with the UK’s Grandparents’ Day on October 2.

The figures are likely to cause concern among those who have highlighted the enduring drag of low interest rates on savings. According to Moneyfacts, the average easy access cash ISA is currently paying just 0.82%, marginally above the 0.6% rate of inflation.2

Despite it being designed specifically as an investment plan for children, only one in eight of our sample of grandparents (12.8%) said they would use a Junior ISA, while less than one in 20 (4.6%) said they would save through a stocks and shares ISA.

Scottish Friendly’s research also found that grandparents are most keen that any money saved is put towards a deposit for a home (18.8%), followed closely by spending it on their education (17.2%).

Scottish Friendly said it has seen an increased demand recently from grandparents looking for sensible ways to save and invest for their grandchildren.

Only parents (or the legal guardian) can open a Junior ISA, however, Scottish Friendly has created a unique solution which allows a single ISA to be split into different pots for each grandchild. Consumers are allowed two ISAs (one cash and one investment ISA) in one year, meaning grandparents can have a choice of accounts for themselves and their grandchildren. 

Calum Bennie, savings specialist at Scottish Friendly, said: “So many grandparents want to give their grandchildren a real helping hand for the start of their adult life. However, they are often being prevented in doing so as they can’t set up a Junior ISA account on their behalf. They have to rely on their own children to open one before committing to save and we are seeing that delays in doing that is creating very real frustration among grandparents who feel they have to coerce and cajole parents to start a savings pot. It is for that reason Scottish Friendly is letting grandparents know they can save for their grandchildren in named accounts but using their own ISA allowance, thereby by-passing the parents and with the money being in their own control throughout .”

Bennie concludes: “Scottish Friendly’s My Choice (ISA) includes cash options if that’s what a grandparent wants but it also gives the the chance of making the investment work harder with a range of investment options including stock market, bonds and guaranteed funds. This allows grandparents to save and invest intuitively with a single pot for each grandchild all wrapped up in the tax efficient advantages of an ISA. From just £10 a month it’s affordable, too. Of course, depending on which investment you select, its value can fall as well as rise and it’s possible to get back less than the amount invested.”

Tax treatment depends on individual circumstances and can change in the future.

Editors notes:

  1. Research conducted by 3GEM Research. Some 563 grandparents in the UK were surveyed.
  2. Source: Moneyfacts analysis of savings rates published in September 2016 http://moneyfacts.co.uk/news/savings/inflation-unchanged-but-savings-rate-cuts-persist/

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