By 2041 the proportion of retired home owners could fall from around 78% in 2023 to around 63%. An increase in retired renters is not necessarily a problem, but because of changes to the supply of housing stock, the proportion of privately renting pensioners will also increase from around 6% in 2023 to 17% by 2041.
Private renting is problematic because rents are higher than in social housing and less secure. In 2022, private renters spent 24% of their disposable income on rent compared to 16% for social renters. Due to Local Housing Allowances freezes, pensioners on Housing Benefit may struggle to find good quality private rental housing that they can afford.
In March 2025, the FCA announced that it was considering options for allowing people to access their pension savings in order to purchase a first home as a way to help tackle the issues around future renting.
While more home buying would help prevent rising numbers of renters, allowing early access to pension savings could:
- Result in people on higher incomes, not those most at risk, buying homes,
- Reduce overall retirement incomes, and
- Create market distortions, making home purchase less affordable for those on lower incomes.
On the other hand, the policy may benefit those who would not otherwise be able to purchase a home and could increase engagement levels.
There are many factors to consider, especially as contribution levels in Defined Contribution pensions are lower than required for many to achieve “adequate” living standards in retirement, and early access could further reduce retirement incomes. If an early access policy included a requirement for higher contributions or encouraged higher contributions, this consequence could be mitigated.
Ultimately, while early access to pension savings for first-time buyers may offer some individuals a foothold on the housing ladder, it is not a silver bullet. Without careful design, the policy risks exacerbating retirement income shortfalls. Any move in this direction must be accompanied by measures to increase pension contributions, strengthen tenant protections, and address the broader structural issues in the housing market. A sustainable solution to the future challenges of renting in retirement requires coordinated action across housing, welfare, and pensions policy, not just a dip into future savings.
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