14/08/2014 12:54 BST | Updated 22/05/2015 06:12 BST

Bank Of Gramps: Doting Grandparents Shell Out £647 Million To Help Grandkids

Portrait of happy grandparents with their grandchildren sitting outdoors

Forget the bank of mum and dad...doting grandparents are forking out £647 million a year to help their grandchildren.

New research reveals that a fifth of grandparents in England aged 50 or over give their hard-earned cash to help future generations.

Grandparents who give are more likely to be homeowners than renters and more likely to have lower or no mortgage debt, according to the research.

The Grandparents Generosity study by the International Longevity Centre-UK (ILC-UK), supported by Key Retirement Solutions and Partnership, found that just under 2.5 million grandmothers and grandfathers gave money to their grandchildren.

Contributions to Child Trust Funds (CTFs), tax-free savings accounts for children available from 2005-2010, were made by one in 25 grandparents.

Across England, grandparents gave a cumulative total of almost £333.8 million to their grandchildren in 2010. Almost £313.8 million was contributed to CTFs.

Seventy five to 79-year-olds gave more than from any other age group, but 80 to 84-year-olds gave the highest amount on average.

Grandparent givers are also more likely to provide care for their grandchildren, and be female and married rather than separated or divorced. And grandparent givers are wealthier than non-givers.

The research reveals that grandparent givers are typically well-off and are likely to have substantially higher incomes from private pensions.

Brian Beach, research fellow at ILC-UK, said: "This research reveals that millions of grandparents are providing financial support to younger generations.

"For grandchildren, these transfers are likely arriving at a crucial transition point, impacting educational and housing opportunities.

"As people live longer and society ages, grandparental giving may have an increasingly important impact on the social mobility of grandchildren."

Ged Hosty, managing director of Equity Release at Partnership, said: "As families become increasingly financially stretched and time-poor, grandparents are stepping in more and more to provide support.

"However, while this trend is to be welcomed as it helps to draw families closer together, it can put a strain on the grandparents finances that they may struggle to recover from.

"Therefore, it is vitally important that people consider all their assets - including their homes - ahead of retirement and take steps to ensure that they can provide as much help as needed without detriment to their own retirement aspirations."