THE BANK of mum and dad is more often associated with funding teenagers or students, but a new study has found Yorkshire pensioners are continuing to provide for their adult children.
One in four Yorkshire over-65s are owed money by their adult children, financial services provider MetLife has found, sparking warnings that people should save now to prevent “financial shocks” in retirement.
The survey of more than 1,000 pensioners also found that seven per cent of over-65s in the region still have children or grandchildren living with them. Across Britain, the average amount outstanding was put at £3,100.
The research comes at a time when many older people have been handed new freedoms over how they use their retirement cash. From April, people aged 55 and over with a defined contribution pension can take their pension pot how they wish, subject to tax, rather than being required to by an income with it called an annuity.
Dominic Grinstead, managing director of MetLife UK, said: “Being able to lend adult children money is important to millions of retired people and many can definitely afford to do so and are happy to pay out. But the fact that so many are helping out adult children demonstrates that people need flexibility in their finances in order to be able to fund potential financial surprises.”
More than 1,000 retired people took part in the research.
The warning comes at the Bank of England’s deputy governor, Sir Jon Cunliffe, said the levels of debt being taken on by British households to fund increasingly expensive homes are creating a “risk” to financial stability.
Last year the Bank took action to damp down rising property prices, by telling mortgage lenders to limit the number of loans worth more than 4.5 times income to no more than 15 per cent of the total. Sir Jon said that this “insurance policy” was still needed because of renewed signs of upward pressure on prices.
“Our concern is not so much about house prices, it is the chain between high house prices, prices growing faster than people’s incomes, and people having to take out bigger and bigger mortgages and the debt that families then have relative to their income growth,” he told BBC Radio 4’s Today programme.
Figures out today showed there were an estimated 139,500 first-time buyers in the first six months of 2015, a “modest decline” of seven per cent on the previous year, the latest Halifax First-Time Buyer Review said.