| Over half (52%) of people are unaware that paying into a pension can reduce their taxable income | By making additional pension contributions, some parents may be able to retain childcare support while growing savings | Many retirees expect to help their grandchildren financially, but this could compromise long-term financial wellbeing |
Half are unaware pension contributions can reduce taxable income
Over half (52%)1 of people are unaware that paying into a pension can reduce their taxable income, making it a valuable financial planning tool as well as a way to save for retirement. This can be particularly important for parents, as those with an adjusted net income above £100,000 lose entitlement to the government’s 15 or 30 hours of funded childcare. By making additional pension contributions, including through salary sacrifice (for which rules change in April 2029) where available, some parents may be able to reduce their adjusted net income below the threshold, helping retain childcare support while continuing to grow their retirement savings.
Supporting grandchildren in retirement comes at a cost
Many future retirees expect to help their grandchildren financially, but doing so could significantly increase the pension savings needed to maintain their own lifestyle. Recent analysis2 has found that grandparents planning to provide regular support may need an extra £58,000 in retirement savings to sustain a moderate standard of living. Around one in five working adults expect to support grandchildren during retirement, despite almost half worrying about running out of money later in life. Balancing generosity with personal financial security will be crucial, ensuring retirees can support younger generations without compromising their own long-term financial wellbeing.
1Standard Life, 2Skipton BS
