The UK must stop treating pensions and housing as separate policy issues to address the growing retirement adequacy challenge, the Society of Pension Professionals (SPP) has argued.

In a new paper, Home Truths: Rethinking Retirement Wealth, the SPP highlighted a “structural mismatch” between the £3.84trn of housing wealth held by UK retirees and an aggregate annual retirement income deficit of more than £48bn against moderate living standards.

The paper argued that many of the assumptions underpinning the current pensions system, particularly that most people will enter retirement mortgage-free as homeowners, increasingly fail to reflect the circumstances facing younger generations.

It noted that homeownership rates have fallen from around 71 per cent in the early 2000s to around 65 per cent in 2024/25, while 31 per cent of future retirees are expected to fall below the Pensions UK minimum Retirement Living Standard (RLS).

By 2040, the SPP claimed that, although 12.9 million people aged 65 and over are projected to be owner-occupiers, 2.2 million are expected to be private tenants and a further 1.8 million social tenants.

The challenge is particularly acute for lifelong renters, with the paper citing estimates that an individual renting throughout retirement would require an additional £269,000 in pension savings to meet their rental costs.

The SPP therefore called for the RLS and value for money (VFM) framework to be updated to explicitly account for rental and mortgage costs in later life, and for housing wealth to be integrated more closely into retirement guidance, including through MoneyHelper and Pension Wise.

It stressed that the current separation between mortgage advice, equity release and financial advice made holistic decision-making more difficult, while housing and retirement planning were also treated separately within government-backed guidance.

Once pensions dashboards are fully established, the SPP suggested that housing wealth could be incorporated to provide savers with a combined view of their later-life resources.

Alongside changes for those approaching retirement, the paper considered the growing tension younger savers face between building a house deposit and saving adequately into a pension.

Rather than allowing widespread early access to pension savings, the SPP suggested exploring changes to employer contribution structures, including whether matching contributions could be redesigned to help younger workers build deposits without accessing their core pension pots.

It also pointed to sidecar savings as a potential way to improve short-term financial resilience while protecting long-term pension savings.

The paper further argued that pension capital could play a greater role in increasing UK housing supply, although it stressed that capital availability itself was not the primary constraint on institutional investment.

Instead, it said pension schemes require projects that are sufficiently scalable and deliverable, and that can be assessed within conventional investment risk frameworks.

The SPP therefore recommended improving planning certainty, increasing the visibility of the housing pipeline and developing standardised investment vehicles that could make residential housing more accessible to institutional investors.

However, it cautioned that “pension capital cannot substitute for effective housing policy”, warning that measures aimed at increasing access to housing finance could simply increase affordability pressures unless accompanied by genuine increases in supply.

The paper also proposed exploring a one-off stamp duty relief for older people downsizing their homes, alongside a significant expansion in age-appropriate retirement housing.

Around 7,000 retirement homes are currently built each year, according to figures cited by the SPP, compared with a recommended target of 50,000.

Looking further ahead, the SPP suggested exploring whether homes sold to fund social care could be acquired into public or social ownership and retrofitted as affordable housing, potentially using pension capital to finance acquisition and refurbishment.

It acknowledged that such a model would present significant challenges, including determining acquisition prices, retrofit costs, geographic mismatches between properties and housing need, and interaction with inheritance and social care policy.

SPP Financial Services Regulation Committee chair, Amanda Cooke, warned that 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,” she continued.

“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.”

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