Longer Lives, Stronger Families? The changing nature of intergenerational support

Despite the positive stories that emerge of people’s readiness to support older and younger relatives, the paper identifies a number of potential challenges ahead associated with societal and demographic shifts. These include: how we can help families provide care for each other as the generations no-longer necessarily live together, ensuring we have the right guidance and advice in place to aid good financial decision-making and assessing what strains older people may come under as they balance later retirement ages, frail living relatives and demands on them as grandparental carers. The report concludes that in these instances and also more broadly, policies need to be designed around the wider needs of families rather than treating individuals and their choices in isolation.

EXECUTIVE SUMMARY

Too often, our ageing society is observed with the growing costs of health or state pensions in mind. However, the implications for families and for support provided across the generations are less well-explored, though no less radical.

Drawing on new public polling as well as long-run data, this study charts how the shape of the extended family has evolved over time. It goes on to explore how the support given across the intergenerational family has changed historically and how it may alter in the future.

Recent reforms and new commitments from the Conservative Government make this important policy territory. The last parliament saw the introduction of a ‘family test’ to ensure that ‘potential impacts on family relationships and functioning are made explicit and recognised in the process of developing new policy’. As the government acknowledged at the time, too often policies treat the population as individuals or households rather than as families and networks of dependencies. This is particularly true about the support network that is the intergenerational family by which we mean grandparents, parents and children as well as great-grandparents and great-grand-children.

Thinking through the role of the wider family is also becoming more important across many policy areas. Unpaid care – much of it provided by family members – is bearing a greater strain of social care support as the population ages. Families also now have greater flexibility to help each other: 6 April 2015 saw the introduction of new pension freedoms with retirees given total flexibility over what they do with their Defined Contribution pension savings. This has expanded the scope for the handing down of wealth as retirees make decisions on their own requirements in retirement alongside the needs of their children and grandchildren. These new freedoms have been complemented by additional scope for bequests on death: the Conservative Government is raising the effective inheritance tax threshold to £1 million. The underlying philosophical argument being ‘it’s your money, you worked hard for it – and you should be able to pass it onto your loved-ones.’

Changes to the structure of families

Chapter 2 illustrates out how the structure of the intergenerational family has evolved over the past century. Families have tended to get longer and thinner over time due to a combination of longer lives, fluctuation in the average age of first-time mothers and reduced fertility. Families with multiple generations alive simultaneously are now the norm and having four or more generations is already not unusual. These phenomena are set to become more common. At the same time, there has been a trend towards greater heterogeneity of family types and the traditional ‘nuclear family’ has changed dramatically.

Importance of intergenerational support within the family

These changes have been accompanied by shifts in the structure of intergenerational family support over time. Chapters 3 and 4 show the continuing and indeed growing importance of intergenerational family assistance.

• Our public polling shows that more than three quarters of the population agree that ‘With people living longer, it is even more important that families stay connected across the generations’. In large part this conviction appears to be based on altruistic desire to support other family members. Two thirds of the population see handing down money or assets as ‘part of the natural pattern of give and take across the generations’.
• The proportion of the population that receive inheritances and gifts has grown over time, and the overall value of inheritances has increased. Housing assets comprise an increasing proportion of inheritances handed down.
• There is increasing evidence that people are looking to hand money down in methods other than simple bequests on death: 60% of adults agree with the statement that ‘It is better to give children money when they need it than to save it to leave as an inheritance’.

But, these are just the financial flows, and practical assistance is also extremely important. Reliance on practical care – provided upwards to parents and grandparents and downwards to grandchildren and greatgrandchildren – has grown markedly in recent decades. This is despite the fact that there has been significant geographic dispersion of the family and a notable growth in one child families making it more likely that parents do not live close to an adult child.

Emerging challenges

Drawing on these trends over time and new opinion research, the paper identifies a number of potential challenges ahead associated with these societal and demographic shifts.

1. Living patterns of intergenerational families may diverge, with some intergenerational families co-residing, others geographically separated and a growing proportion growing old without children or grandchildren. These raise major opportunities and challenges for civil society. But, there are also important policy implications such as for care (to ensure families have clarity on their responsibilities and liabilities) and for housing policy (where there is a shortage of housing suitable for older people and where re-locating is harder than it could be).
2. ‘Under-pressure retirees’, faced with the new pension freedoms, may struggle to balance the twin demands of younger family members needing support for major life events and living costs versus their own needs in retirement. Guidance, advice and financial products will increasingly have to recognise the range of demands on retirees’ resources as well as the assets at their disposal.
3. ‘The Skipped Generation’ in their middle years may see their hopes and expectations of receiving an inheritance or major gift thwarted. Older parents may run down their assets paying for care or see the needs of grandchildren – for instance in getting on the housing ladder – as greater than the needs of their adult children. With many in their middle years waiting on an inheritance to fund their retirement, government may need to look to steps to encourage greater pension saving.
4. ‘In-betweeners’ in their 60s and living in four generation families may find themselves facing triple pressures of continuing in work as the state pension age rises, caring for an elderly parent and providing grandparental childcare. Employment rights, flexible work and respite care are all likely to have to be revisited in the years ahead.

At the heart of each challenge is the need to cast policy prescriptionsaround the wider needs of families rather than observe individuals and their choices in isolation. Recognising the obligations, dependencies and behaviours within family networks should inform how we design policies. In so doing, these networks can be optimised and sustained.