Old couple with woman

4million retirees help out during cost of living crisis

5 minutes

A third of young adults and families with young children are struggling financially and some are turning to the older generation for support

Research from our Wealth and Wellbeing Research Programme* found that more than a third of people in retirement, that’s about 4.3m pensioners, have given financial help to family and friends in the last six months. 

  • Over 20m UK adults say they have helped family and friends financially in last six months
  • 4.3m retired people have helped family and friends
  • The main reasons people gave money were to help with day-to-day costs and bills


Many have had no choice but to turn to family to help pay for day-to-day expenses such as utility bills, housing costs and childcare, yet the extent to which retirees are stepping in with financial support is striking. 

Our research calculates that the average amount given overall by retirees to their friends/relatives is £7,000. Those helping grandchildren, in particular, gave an average of £15,000, with one in four grandparents helping towards a property deposit. 

Retirees said they had also helped their friends/families to pay off debts, loans and credit card payments, while one in 10 gave money to pay for nursery, childcare or university fees. Some retirees also helped their friends/families to pay their mortgage or rent.

It’s understandable why grandparents want to help their family and pass their wealth and assets down through the generations. Here are some of the options which might be available to you

Please note that these options and any references to taxation are based on our understanding of current legislation (as at 4 January 2023) and HM Revenue & Customs practice which can change.

Gifting money

Gifting money early can reduce inheritance tax liabilities and a grandparent can gift up to £3,000 a year without it being added to the value of the estate. A couple could therefore gift £6,000 a year. If some or all of it was invested in a pension it would get tax relief.  

Paying into a pension

Although most people won’t set up a pension until they reach working age, a pension can be started as soon as someone is born. In addition, any contributions made by a parent or grandparent, which can be made directly to the plan as ‘third party contributions’, will be treated for tax relief purposes as if they were made by the beneficiary themselves. 

This means that contributions paid to a ‘relief at source’ scheme will receive tax relief of 20% (£20 for every £80 net contribution) as long as the gross contributions do not exceed the beneficiary’s relevant UK earnings for the tax year. In addition, where a beneficiary has paid income tax at a higher rate, they will be able to claim the difference directly from HMRC through self-assessment - i.e. a further 20% for a higher rate (40%) tax payer. 

Although a child under the age of 18 is unlikely to have relevant UK earnings, total contributions up to the ‘basic amount’ of £2,880 net (£3,600 gross) can be made each year and will still benefit from tax relief.

Pension contributions can be one of the more tax efficient ways to gift money to a child or grandchild, but the drawback is that money is likely to be inaccessible until they reach 57 (normal minimum pension age is rising from 55 to 57 in April 2028). Some people may therefore want to find other ways to help family where there is more chance that they will be around to see their loved ones enjoy the money.

Lifetime ISAs (LISAs)

If the child or grandchild is between 18-40, helping them save into a lifetime ISA (LISA)** can be beneficial, especially if they are trying to raise a deposit for a first home. This is because the Government will add a 25% bonus to deposits of up to £4,000 a year (i.e. £20 for every £80 deposited). However, if withdrawals are made for any purpose other than purchasing a first home, a tax penalty of 25% (i.e. £25 on a withdrawal of £100) will apply unless the individual is terminally ill or aged 60 or above. Since the tax penalty exceeds the initial bonus, it is normally not the most tax-efficient investment if the penalty is likely to be incurred.

**Only the child or grandchild, as the account holder, can open and manage their LISA but it’s possible to gift money to an account holder to pay into their LISA.


For those who want more control over how money is spent, setting up a trust can help ensure any investment is used appropriately. There are a wide variety of trusts that can be used to meet individual requirements. 


*The LV= Wealth and Wellbeing Research Programme is a quarterly survey of 4,000 UK adults people to understand UK consumers and their attitudes to their personal finances and wellbeing. The statistics shown here are as a result of the survey we conducted in June 2022.