Private school parents risk retirement savings to handle new education costs

Around fifty-four thousand private-school parents might tap into their pension-funds because of new tax rules that will make education costs go up from early next year. The research done by Charles Stanley shows that 9% of parents are ready to use their retirement money this way

Vanessa Dockerill from East Sussex faces a tough choice — her daughters school fees went up by £4‚500 (which is way-more than expected). Her family decided to use her husbands tax-free pension money; she now has a six-hour daily commute to keep up with payments. “My husband made the difficult decision because we did not want to let our daughter down‚“ she explains adding that their pension might run dry in about ten years

In Worcester Stewart (who has two kids in private school) needs to deal with extra costs of £70‚000 in next five years. His wifes pension access creates a tricky situation: taking money from her final-salary pension means she must start drawing the whole thing — which could leave her with nothing by retirement. “I think realistically we are going to have to use both pensions but it just gives massive risk‚“ he says

Harry Bell from Charles Stanley points out that parents need to think carefully about their retirement plans. However he notes that new inheritance-tax rules on pensions make early withdrawals more reasonable now. Gianpaolo Mantini from Saltus adds: “For those over 75 its arguably going to be more tax efficient to draw down these funds“