The Society of Pension Professionals (SPP) has warned that millions of people are at risk of a retirement shortfall because the UK has failed to join up housing and pension policy.
In a new paper published today, the SPP highlights a critical structural mismatch in the UK economy.
‘Home Truths: Rethinking Retirement Wealth’, warns that the UK can no longer treat housing and pensions as separate policy issues if it hopes to solve the growing retirement adequacy crisis.
The paper reports that UK retirees currently hold an estimated £3.84trn in housing wealth, yet face an aggregate annual retirement income deficit exceeding £48bn.
It points out that many current retirement planning models rely on the outdated assumption that most individuals will retire mortgage-free.
With declining homeownership rates and a sharp rise in lifelong renters, who require an estimated £269,000 more in pension savings to cover rental costs, the current system is leaving millions unprepared, the report claims.
The SPP said that fragmented advice, separate regulatory regimes and tax barriers, like stamp duty, prevent people from making holistic decisions about their wealth.
The report makes a series of recommendations including:
· Unify Guidance. Merge housing wealth into mainstream later-life advice platforms such as MoneyHelper and Pension Wise to break down regulatory silos between mortgages, equity release and pensions.
· Update Retirement Metrics. Revise the Retirement Living Standards and Value for Money (VfM) frameworks to explicitly account for rental and mortgage costs in later life.
· Remove Downsizing Barriers. Explore a one-off stamp duty relief for older downsizers, alongside a significant expansion of age-appropriate retirement housing.
· Mobilise Institutional Pension Capital. Build standardised housing investment vehicles to channel pension capital into residential development and boost housing supply.
· Support Younger Savers. Explore opportunities to restructure employer matching contributions so younger savers can accumulate home deposits without raiding their core pension pots.
· Recycling Care-Funded Assets. Explore mechanisms to acquire family homes liquidated to pay for social care and use pension capital to 'retrofit' them into social housing.
Amanda Cooke, chair of the SPP Financial Services Regulation Committee, said: "Pensions and housing draw on the exact same household resources, yet policy treats them as completely separate worlds.
“While current retirees often rely on property equity to mask savings shortfalls, future generations facing high rents and lower homeownership rates simply won't have that cushion.
“We need an integrated approach, one that unifies guidance, updates living standards to reflect real housing costs, and unlocks institutional pension capital to help build the homes the UK desperately needs."