More than one in ten (12%) 20-35 year olds are prepared to ask their parents to access pension savings to help pay for a mortgage deposit, research from Old Mutual Wealth[1] shows. But only half as many over 55s are willing to use their pension to help children or grandchildren buy a home.

Helping children or grandchildren 
Half as many over 55s are willing to use their pension to help children or grandchildren buy a home. Over 55s with private pension savings are now able to access their retirement funds with complete flexibility, following the introduction of new ‘Pension Freedoms’ on April 6 this year.

Asked if they would consider speaking to their parents about taking a lump sum from a pension in order to help with a house deposit, 12% of 20-35 years said they would.

Getting a foot on the housing ladder 
Although over one in ten among the Generation Y cohort (also known as Millennials, born between about 1980 and 2000) hope their parents’ pension will help them get a foot on the housing ladder, just 6% of those in the 55-70 age bracket say they would use some or all of their pension wealth to help children with a house deposit.

One of the big risks with these 
freedoms is that individuals see the opportunity to access a large capital sum and use it for something other than income in retirement. While every parent wants to help their children on to the housing ladder, they should think first about their own needs in retirement.

Financial support later in life 
Equally, anyone tempted to pressure their parents into drawing a lump sum to help with a deposit should be very careful. If parents take too much from their pension and don’t have enough to retire on they may rely on their children for financial support later in life.

Pension freedoms do however give people the option to deploy their pension pot as they wish. For some families, particularly those where the older generation have other assets with which to generate retirement income, the opportunity to help their children on to the housing ladder could be a very appealing.

Source data:
[1] All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1023 UK adults age 55-70 and 570 UK adults age 20-35. Fieldwork was undertaken between 11/03/2015 – 17/03/2015. The survey was carried out online.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.
A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.