New Nest Insight research will examine potential for closer links between housing and pensions
Nest Insight has launched a twelve-month research project to explore whether financial security could be improved through closer integration of pension assets into the UK housing system. The work is funded by the abrdn Financial Fairness Trust. It reflects our focus on whole-of-life financial wellbeing and the need for a more holistic approach to financial security for everyone.
Having a secure and affordable home is a crucial determinant of financial security
It is also linked to better physical, emotional and educational outcomes, and higher living standards. However, economic changes over the past thirty years mean that today’s working-age adults have persistently lower levels of home ownership than their parents and grandparents. They are also less likely to be able to access social housing. The result is a sharp increase in private renting among low-to-middle income households, where people face the greatest uncertainty around the affordability and longevity of their living arrangements.
Without measures that increase access to secure and affordable homes, many of these households will have to pay rent, or service mortgage debt, from their retirement income through later life. This means that in the near future retirees will face higher housing costs than is the case today. But in most cases the increase is not matched by a commensurate increase in pension saving.
Could pensions hold the key to housing security?
These changes present a complex challenge for people and policymakers. There is consensus on the risks that housing costs pose to financial security but there is little consensus on how we can mitigate them. Recognising the need for solutions, commentators including the Financial Conduct Authority (FCA) are starting to ask whether there is a role for pension assets in the UK housing system.
Closer integration between housing and pensions could happen in two ways. The first option allows individuals to use savings from their pension pot towards home ownership, either through early access or as collateral towards a home loan.
For many households, pension savings will be the only or largest financial asset they hold. Some commentators argue that this makes them a logical place to look for a solution to the risks that housing can present to financial security. Some also suggest that opening up the pension system in this way could encourage people to make higher levels of contributions. Others argue however that pensions should remain ringfenced for retirement income, and that it is not the role of the pension system to fix the housing crisis.
The second option allows the pension system to form part of a wider framework that supports greater institutional investment in the national housing system, particularly in social and affordable housing.
There are examples of both around the world. However the question of whether they could work in the UK is one for which there is little evidence and few answers.
Research Overview
To tackle this question our project includes new qualitative and quantitative research, international comparisons, analysis of existing data and expert interviews. Experts we have spoken to so far have expressed support for the concept of closer links between housing and pensions. There is also a clear willingness to identify and tackle barriers that could constrain ideas. But we also hear reason for caution.
Our final report is due to be published in early 2026. Between now and then we want to publish two further updates on our work, while continuing a programme of consultation across a range of relevant stakeholders. If you would like to know more about the research, we would be delighted to hear from you.
Anna Brain, Research Lead at Nest Insight
