Mind the gap: Report exposes the wealth divide between generations in the East of England

Photo credit: Dominic Lipinski/PA Wire

Photo credit: Dominic Lipinski/PA Wire - Credit: PA

An urgent change in how parents and grandparents pass on their wealth to their children is being called for today, as a new report reveals the widening generation wealth gap.

The research shows that people in the East of England are likely to fall more than half a million pounds short of their ideal pension pot, while more than a quarter of the region's population admits to saving nothing at all.

To solve the problem, wealth manager Brewin Dolphin, which carried out the research, says older generations should consider passing on their wealth earlier in life, with every pound gifted and invested today potentially worth three times as much to grandchildren later on.

Are you supporting your children or grandchildren financially? Email mark.shields@archant.co.uk or call 01603 772426.

Other findings of the Brewin Dolphin Family Wealth Report include:

You may also want to watch:

• A pensions shortfall of £581,000 for 18-44 year olds. People in that age group think that £28,000 per year in retirement would afford them a comfortable retirement, but with their average expected pension pot expected to be just £148,000, they will fall short in what they need by £581,000.

• 27% of the East of England's population admits to saving nothing at all – even the higher income groups think they do not have enough spare cash to save.

Most Read

• Baby Boomers have most of the wealth and can make the biggest difference. Over-65s in the UK are sitting on property wealth of £1.3tn. Pensioners' incomes are rising faster than the median income for the working population due to generous final salary pensions and the 'triple lock' on state pensions.

• Brewin Dolphin has called on the older generation to rethink their inheritance planning: regular gifting to grandchildren via a JISA or pension can multiply the ultimate financial impact to them thanks to compounding interest and investment returns, and make substantial savings in inheritance tax. Yet only 2% of those in the East of England have done or would consider doing this.

The company has also called on the government to consider new tax incentives to help, including the introduction of a Saving for Grandchildren tax incentive scheme that would see a gift of 10% from a grandparent's estate reduce their inheritance tax rate from 40% to 36%, similar to the current charitable giving scheme.

Liz Alley, divisional director financial planning at Brewin Dolphin, said: 'The harsh reality that this country faces is that the outgoing Baby Boomer generation will be the last to enjoy a comfortable retirement unless urgent action is taken now.

'We are calling for older people to fundamentally rethink how and when they pass on their wealth to younger relatives. The solutions we are proposing today are based on earlier and regular gifting as part of a strategic financial plan, rather than focusing on a one-off inheritance.

'This could help set grandchildren up for life as well as reduce inheritance tax.'

Are you supporting your children or grandchildren financially? What do you think? Email mark.shields@archant.co.uk or call 01603 772426.

Become a Supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Become a Supporter