With so many current crises, it’s easy to forget looming future crises.

For today’s working-age people, future pension crises arise from economic conditions, low contributions, early access to pension savings, increases to life expectancy and to the state pension age.

Underlying all these trends are drops in home ownership. PPI modelling estimates that home ownership among pensioners will drop from 78 per cent today to around 63 per cent in 20 years and private renting will grow from 6 per cent to around 17 per cent.

Drops in home ownership matter, because renters have lower disposable incomes and entitlement to housing benefit can be eroded by private pension savings. English Housing Survey data suggests that private renters (of all ages) spend around 33 per cent of their income on rent.

Renting in retirement is associated with lower levels of security – rents can increase, and housing conditions can change – which may be particularly tricky for older people with health conditions to manage.

So, the impending increase in, particularly private, renters means that managing income will be harder for future pensioners. Some policy levers, such as an increase in affordable homes and social housing, could help but solutions take time, and time is of the essence.

This year, the PPI Pensions Framework, sponsored by Aviva, will explore in depth the potential impact of changes in ownership levels and review the role the policy can play in helping future pensioners to avoid the negative implications of renting.

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