Grandparents bolster education economy by £6.4bn, finds Saga Investment ServicesThursday 14 April 2016
• Grandparents contributing an average of £181/month towards grandchildren’s educations • More than one in three (38%) contributing now or plan to in the future • Helping to meet the cost of university is the biggest priority for grandparents
Grandparents bolster education economy by £6.4bn, finds Saga Investment Services
With families anticipating the announcement of primary school places on Monday 18 April, grandparents are contributing £6.4bn1 annually to help fund the education of their grandchildren, according to new research carried out by Saga Investment Services.
One thousand grandparents2 across the UK were surveyed on behalf of the over 50s retirement and investment specialist, which found that almost one in five (17%) of those with grandchildren in education are currently contributing towards their grandchildren to the tune of £181 per month. A further 21% expect to contribute in the future.
These ‘Living Legacy Leavers’ are motivated by seeing where their money is going while they are alive (70%) and because it feels like a lasting legacy (39%). Two thirds of the grandparents interviewed by Saga (66%) said it was them or their partner that initiated the conversation which led to contributing, yet 30% say they would contribute/contribute more if their child asked and 15% say they would contribute/contribute more if their grandchild asked.
Grandparents say their top ambitions for their grandchildren are for them to be happy (80%), healthy (79%) and to have a good job (40%). Outside financial support, 47% of grandparents are on call if their grandchildren are poorly when in school; 32% provide childcare outside school hours and 31% spend time helping them learn. Some 15% do the school run.
Gareth Shaw, head of consumer affairs at Saga Investment Services, said: “Many grandparents are happy, willing and able to help their grandchild achieve their dreams by contributing to their education. Their pleasure at being able to use their time and money to help their grandchildren is clear from our research.
“With education firmly on the minds of many families ahead of primary school places being confirmed, there’s more that these generous grandparents could do to maximise the money they are putting away for their families’ future. Just one in 10 are investing their money in products that could deliver a better return in the long run. For those thinking about supporting their grandchild in higher education, and therefore saving for the future, they could consider taking on a little risk to maximise the returns they get for their grandchild.”
According to the research, those contributing to their grandchild’s education are doing so from pension or savings income (48%), bank account savings (38%) or earned income (29%). One in five (20%) are funding it from a savings product they’ve taken out specifically with the purpose of saving for education, while just one in 10 (8%) are funding it from investments in stocks and shares, despite the fact many are talking about contributing in the mid to long-term.
Meeting rising higher education costs
Higher education is the top priority for financial contributions for 42% of grandparents surveyed, and one in three (35%) are keen for their savings to help towards education fees.
Taking the average monthly contribution of £181, Saga Investment Services calculated that grandparents could build a minimum higher education fund of more than £28,0003 for a child entering primary school in September this year. Depending on how they invest this money, the return could be potentially higher. A £181 monthly saving growing by 5% per annum could end up at more than £39,000 – although it could be lower if investment returns fall.
The contribution grandparents are currently making towards education could be vital in making children’s university dreams become a reality. According to UCAS, the cost of tuition fees alone in England, Wales and Northern Ireland can be as much as £9,000 per year today. From 2017, some universities will be able to increase fees in line with inflation, according to calculations from Saga Investment Services this could mean that a child who is five-years-old today could potentially face annual tuition fees of more than £11,6004 by the time they reach the age of 18, notwithstanding any further policy changes.
Notes to editors
1. Researched carried out by Opinium found that 39% of the UK adult population is made up by grandparents, and that 17% of them contribute financially towards education, equivalent to 2.9 million people according to the ONS 2014 mid-year estimates. The £6.4bn figure is derived by multiplying the average monthly contribution this population figure and calculating the total over a 12-month period.
2. Opinium, on behalf of Saga, based on a sample of 1,000 grandparents across the UK, between 1 and 4 April 2016. Opinium is a member of the British Polling Council and abides by its rules.
3. The average monthly contribution made by grandparents is £181, or £2,172 per annum. Savings over a 13-year period, representing education from primary school until the child reaches 18 years old, totals £28,236.
4. In the Summer 2015 Budget, the government announced that it would allow institutions offering high teaching quality to increase their tuition fees in line with inflation from 2017-18, and consult on the mechanisms to do this. Saga Investment Services projected the increase in fees over a 13 year period based on the Bank of England’s inflation target of 2% to arrive at the figure of £11,642.
5. Regional distribution of grandparents currently or expecting contribute towards a grandchild’s education. The figure for the whole UK is 38%.
North East 31%
North West 37%
Yorks & Humber 37%
East Midlands 40%
West Midlands 30%
East of England 35%
South East 40%
South West 25%
Northern Ireland 48%
About Saga Investment Services
Saga Investment Services has been developed to open up the world of investing and financial planning to the UK’s over 50s in the run up to and throughout retirement, and to make the process as simple and stress-free as possible. Customers can invest from just £100, and have access to investment advice and financial planning services. Saga Investment Services champions a straight forward and transparent approach to investing, and is a proud member of the Plain English Campaign. It is a joint venture between Saga, the leading provider of services to the nation’s over 50s, and Tilney Bestinvest, the expert investment and financial planning group.
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press release does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Past performance is not a guide to future performance.
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