A quarter feel under pressure to lend their family money from unlocked retirement pots, while more than one in five expect to use pension savings to fund care costs of elderly relatives (23%) or to invest on behalf of the wider family – e.g. in a property for children (22%).
While almost one in four (23%) believe the reforms will enable people to manage savings more effectively, two in five (39%) worry that the reforms could mean not having enough money for the whole of their retirement.
The effect of the government’s pension reforms may be particularly burdensome on certain groups in society, especially those with adult children still living at home, or ‘full nesters’, who were identified as the most financially strained group in the Centre’s previous report.
One in four full nesters think they will come under pressure to use any pension savings not spent on an annuity to fund care costs of elderly relatives (25%), compared to 19% of empty nesters. Full nesters were also the most likely to feel under pressure to use their retirement savings for investments on behalf of the wider family (25% compared to an overall average of 22%).
Additionally, a further 29% of full nesters expect retirement savings to be used for loans to other family members, compared to 27% of empty nesters and grandparents.
However, the report also found that parents are increasingly looking to their children to plug the gap that loans and investments from an unlocked pension pot may leave in their retirement savings, with 41% of adults believing that children have an obligation to support their parents.
Carolyn Fairbairn, Chair, Centre for the Modern Family, said:
“The reforms to the pension system announced in the 2014 Budget are transforming the retirement landscape. Although for many they will represent greater autonomy over how to use their savings in later life, it is important to consider the knock-on effects on families. Many may feel pressure to access their pots to support struggling family members in an already challenging economic environment.
“While it is reassuring that family members are seeing the importance of pulling together in this way, it is vital people are aware of all the short and long-term implications for retirement pots, and for policy makers and insurance companies to help people make an informed decision about how to best use their savings and manage their income in retirement.”
