| Parents sacrifice pension for school fees |
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| 24 June 2008 | |
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Middle class families are sacrificing their pension savings to pay for their children's school and university fees, research has found. Insurer MetLife reports that £7.3 billion that should be going into retirement saving is being diverted into educationsal costs, with around 23% of adults saying the costs of funding education whether it is extra tuition, helping children with university fees or even paying for private education is having a negative impact on their ability to save into a pension.
The average amount being diverted from pensions into paying for education is around £57 a month but some people are cutting back on pension saving by as much as £300 a month. Around 10.6 million adults say paying for education for children and themselves is affecting how much they can invest in their pension.
Figures from the Office for National Statistics show that education costs – including private tuition, university fees and independent school fees - rose 13.2%last year compared with the headline Consumer Price Index rate of 2.1%. University fees account for around £3,000 a year while figures from the Independent Schools Council show the average cost of private education is £9,000 a year with 564,750 pupils in England going to independent schools.
MetLife warns that cutting back on pension contributions will reduce income in retirement and that is particularly damaging when retirement savers have to plan for spending up to 30 years in retirement because of increased longevity and the effect of inflation on savings.
“In the current economic climate everyone’s finances are under strain and it is understandable if people cut back. However saving into a pension is a vital part of financial planning and savers need access to a wider range of flexible retirement solutions offering increased certainty.” Tag this article :     |
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