Pensions warning: 300,000 grandparents risk Christmas debt as private contributions fall | Personal finance | Finance

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State pension recipients and pensioners of all kinds are set to struggle this Christmas as the coronavirus continues to impact incomes across the economy. More than 300,000 grandparents could end up spending more than they can afford on their grandchildren this year, according to a new SunLife study.

SunLife research has shown that grandparents would have to spend £104 on each grandchild this Christmas, which with an average of four grandchildren each is £416 in total.

The bills could be even higher as one in five grandparents (19%) said they planned to spend £150 or more on each grandchild, which is at least £600 in total.

While grandparents’ hearts may be in the right place, these plans could do more harm than good.

Additional information from SunLife showed that on average grandparents over 50 have a monthly income of £2,083, and after all essential and non-essential expenses have been paid, they are left with just £249. £ “in cash”.

READ MORE: Financial regrets: Pension and mortgage choices come out on top

Simon Stanney, Director of Equity Release at SunLife, commented: “Our research shows that 28% of those over 55 do not have a private pension, of those who do, only 22% are still contributing regularly.

“And now we know that 16% of them have stopped or reduced their payments because of the crisis. »

For grandparents in particular, it has been revealed that up to 31% of them do not have a private pension.

Additional research from SunLife, which again surveyed 3,0000 people over the age of 50, found that grandparents believe their public pension will be the biggest contributor to their retirement compared to private pensions (92% for pensions public, compared to 63 for private pensions).

However, grandparents may be hit with an unexpected expense in their later years, as many over 50s have explained that they would turn to inheritance to fund their lifestyle.

While this all sounds worrying, analysis from Becky O’Connor, head of pensions and savings at Interactive Investor, revealed that there could be optimistic changes ahead for pensions next year.

Looking at potential policy changes coming in 2021, Becky pointed to the following possibilities:

  • The Pensions Bill is expected to receive Royal Assent. The main principles of the bill are to increase regulatory powers to protect people from pension scams, to act on climate change through pension investments and to allow the pension scorecard both expected.
  • The DWP is likely to release further updates on its consultation on how to make it easier to understand annual statements of benefits for workplace pension plans.
  • We can expect the pensions regulator to provide an update on its work to tackle scams.
  • The possible implementation of measures to encourage retirees to review the amount they hold in cash in relation to investments.
  • The government could seek to lower the minimum age for automatic enrollment in order to increase the level of private pension benefits.
  • The government could explore the possibility of earlier access to pension benefits for those who are unemployed and unable to work as they approach the legal retirement age.
  • The government could choose to make national insurance contributions payable by people over the legal retirement age who choose to continue working.
  • A focus on how to boost self-employed retirement savings, which may have suffered further during the pandemic.

While many people in their later years may be hesitant to tackle their retirement issues, Becky urged savers to act sooner rather than later.

Becky concluded: “It’s never easy to make sure your pension is at the top of your to-do list.

“But doing it just once this year could reap dividends later in the form of thousands of pounds saved on fees or gained on investment growth.

“In other words, sorting out your pension could be the most lucrative part of the paperwork you’ve ever done.”

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