Grandparents to pass on '˜wealth mountain' worth £400bn

A 'wealth mountain' of more than £400 billion is set to cascade down from grandparents to the younger generations in the coming years, an insurer has calculated.

Insurer Royal London has calculated that grandparents are set to pass on a "wealth mountain" worth hundreds of billions of pounds.

Royal London surveyed more than 5,600 people from the older, middle and younger generation of adults to find out their plans and expectations for receiving an inheritance.

It found that among the grandparents surveyed, all of whom were home owners, the typical estate expected to be left was between £400,000 and £500,000.

Based on just over a million people being in this situation, “this suggests a ‘wealth mountain’ of over £400bn set to be passed on,” across the UK, the report said.

Generally, the “sandwich generation” of 45- to 64-year-olds were the most likely recipients of this wealth, the research found – but around half of grandparents also plan to pass on wealth directly to their grandchildren.

And many people in the middle sandwich generation also feel pressure to pass any inheritance they receive straight on to their own young adult children – the millennial generation – the research found.

Two-fifths (40 per cent) of 45 to 64-year-olds feel that there is pressure to pass on wealth.

Nearly two-thirds (62 per cent) are concerned about the financial position of the younger generation who have not generally seen their wealth increase, due to surging house prices, in the way some people in the older generations have.

But the report also warned that those millennials set to benefit from the expected cascade of wealth passed down the generations are likely to be in the minority among their age group.

The research found only around four million of the 17 million people aged 25 to 44 are in the “fortunate position” of having grandparents with housing wealth.

Sir Steve Webb, a former pensions minister who is now director of policy at Royal London, said:“Many in the next generation feel under considerable pressure to pass any inheritance straight on to their own children as they are acutely aware of the challenges faced by their millennial offspring”.

He added: “Those millennials lucky enough to have home-owning parents and grandparents may be set to benefit from significant inheritance which will help them on to the housing ladder.

“But the majority of millennials are unfortunately not in that advantageous position.”