Tue | Oct 4, 2022
ADVISORY COLUMN: PERSONAL FINANCIAL ADVISER

Oran Hall | Children as pension

Published:Sunday | September 11, 2022 | 12:08 AM

My friend Irwin invited me on his radio programme a few days ago to discuss the topic of parents seeing their children as their pension and related to me that he overheard a gentleman announcing that he was giving his children a good education...

My friend Irwin invited me on his radio programme a few days ago to discuss the topic of parents seeing their children as their pension and related to me that he overheard a gentleman announcing that he was giving his children a good education because they were his old age pension.

I know two women who had contrasting experiences. One, a single mother, somehow was able to raise a family including two children who became nurses and two who became teachers. The other was not a single mother but her children did not do as well.

The single mother did not live in luxury but was well taken care of by her children. I never heard her complain and she lived past 80. The other mother also lived past 80 but was not satisfied with the standard at which she was living and complained to me in the presence of one of her daughters that the children were not doing enough to help her. The daughter responded that she and her siblings were doing the best they could considering that they had the needs of their own families to take care of.

Here, we see one major constraining factor: Some children would want to take care of their aged parents but are not able to do as much as they would want to do. Of course, there are those who choose to forget about their parents once they “have made it”.

A case in point. I attended the funeral service of a lady who lived to a reasonable age and who had very serious health challenges. The conditions in which she lived were not good, and she depended on others to provide some of her needs.

I saw some very well-dressed people at the funeral service, including one gentleman who was so well-dressed even our prime minister at his most immaculately dressed would have felt good in his company. He was shedding copious showers of tears. Guess who he was? Her son. And his siblings looked pretty good too.

Although Section 10 of the Maintenance Act makes provision for parents to sue their children for financial support, the conditions under which this can be done are very clearly defined. For example, the child must not be a minor, the child must be capable of providing the needed financial support, and the person must be in need of financial support due to old age and physical or mental infirmity or disability. This responsibility also extends to grandparents in certain defined situations.

There are cases in which parents may not have any form of infirmity or disability but there is a clear need for assistance because of their financial situation. In fact, what is so wrong for children to take care of parents who often sacrifice so much to give them a good education to make them who they are, if there is the need to do so?

In situations in which parents need financial support in old age, it ought to be the responsibility of their children, even their grandchildren in some cases, to provide for them rather than leaving that responsibility to the state and organisations such as the church.

This is not to say that parents should not provide for the later years of their lives because they believe their children have a responsibility to do so due to the investment they made in their education and training, sometimes at great sacrifice.

Parents need to find a way to be provident. They can save what little they can, contribute to the National Insurance Scheme where possible, although its benefits are not very significant; contribute to an Approved Retirement Scheme if they are registered taxpayers; and set up income-generating assets where possible. Considering the effectiveness of the ‘partner’, those who embrace it can use it to generate funds to invest in worthwhile ventures over time.

I recognise, however, that some parents just do not have the means nor the earning power to generate the resources to provide meaningfully for their later years.

As an aside, I note how exultant some parents are when their children do well in sports as they no doubt look to very bright days ahead. For sure, some families will be lifted out of poverty, but those parents need not leave their entire future to their stars, whose sporting careers tend to be short.

A good balance can be struck. Parents can do what they can to provide for the twilight years, and children should never forget that they have some responsibility to assist them to the extent they are able. Put something in the budget for them. It just does not make sense to buy the most expensive funeral package for parents who would have loved to be provided for when they needed it most.

- Oran A. Hall, author of ‘Understanding Investments’ and principal author of ‘The Handbook of Personal Financial Planning’, offers personal financial planning advice and counsel.finviser.jm@gmail.com