A new paper is calling for housing and pensions to be considered together and warns fragmented advice and separate regulatory regimes, along with tax barriers like stamp duty, are preventing people from making holistic decisions about their wealth. 

 

In the paper titled, ‘Home truths: rethinking retirement wealth’, the Society of Pension Professionals argues that housing and pensions should no longer be treated as separate policy issues if the growing retirement adequacy crisis is to be addressed. 

 

The study follows a similar paper by the Association of British Insurers, which said last month that policy may need to take an integrated approach to pensions, housing, benefits and social care as 2m more people are projected to rent in retirement, 1.3m of them in the private rented sector. 

 

UK retirees face an aggregate annual retirement income shortfall of more than £48bn but sit on estimated housing wealth of £3.84tn, the SPP noted, but warned this is set to change with declining rates of home ownership. 

 

"Pensions and housing draw on the exact same household resources, yet policy treats them as completely separate worlds,” said Amanda Cooke, chair of the SPP Financial Services Regulation Committee. 

 

“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,” she said. 

 

 

The SPP recommends bringing together guidance on housing wealth into later-life advice platforms like MoneyHelper and Pension Wise. The SPP also wants the Retirement Living Standards to include mortgage payments or rent, which are not currently factored in. 

 

Policymakers meanwhile should explore a one-off stamp duty relief for older downsizers alongside a significant expansion of age-appropriate retirement housing, it suggests, and argues that building standardised housing investment vehicles could channel pension capital into residential developments. 

 

As well as proposing tax breaks and housing for older people, the SPP says opportunities should be explored to restructure employer matching contributions, “so younger savers can accumulate home deposits without raiding their core pension pots”. 

 

Even more controversially, the society suggests exploring “long-term mechanisms to channel family homes liquidated [to pay] for social care into public ownership, potentially using pension capital to fund their retrofit as social housing”. 

 

It does not go into the investment benefits for pension funds of doing up individual family homes, how nationalisation of single family homes would be financed, or whether local authorities would be supportive – nor how the reason for a sale would be established and recorded, or how the owners would be convinced to sell to the state, short of infringing property rights. 

The paper does acknowledge that this approach would pose “challenges”, citing the difficulty of agreeing an acquisition price, “the politics of state acquisition” of family homes. It also notes geographic mismatches between released homes and housing need, retrofit costs, and the interaction with inheritance and wider care-funding reform as potential issues. 

Despite these concerns, the SPP insists that “as pension capital seeks long-term, socially useful investments and care funding rises up the policy agenda, using housing wealth consumed by care to help rebuild the social housing stock is the kind of joined-up thinking that deserves serious exploration”.