This is the third of a series of research previews from Nest Insight’s research programme exploring whether pension savings can help ease pressures on home ownership and housing in the UK to improve financial security for low- to moderate-income households.
Should people be able to use their pension savings towards their first home?
It’s a question which sits at the heart of the housing and retirement research launched by Nest Insight earlier this year.
The challenges of Britain’s housing pressures are widely acknowledged. More and more people are privately renting later into their working lives, presenting costs and challenges that can carry forward into retirement. There is also no certainty that social housing will be able to provide the growing population of private renters in their fifties and sixties with the affordable, secure and good quality homes they need through retirement, even if ambitious building targets are met.
‘The mental, physical and financial burden of not having a secure place to live causes untold stress and anxiety’ – Nest Insight Housing and Pensions research participant
Increasing home ownership is a priority for government and industry, in support of greater housing and financial security. At a high level, a key policy objective is to help people with small deposits and low incomes to be eligible for a mortgage, both by accelerating mortgage reforms and increasing the supply of affordable homes. But industry experts are asking whether we need to look beyond these traditional approaches for new ways to widen access to home ownership. The idea of allowing people to use some of their pension savings towards a first-time property is one of them.
Over the past six months, we’ve undertaken expert interviews, data analysis, modelling, a nationally representative omnibus survey and qualitative research to learn more about this proposal. We’re now starting to bring the results together and explore three key questions in relation to this part of the work:
- Who might be able to buy a home under a policy that allows people access to (some of) their pension savings?
- Would such a policy make these homebuyers better or worse off in retirement?
- How do people feel about the proposal?
In this article we share some early insights into public opinion, based upon initial analysis of a representative online survey of 4,000 UK adults and an online discussion forum with 48 renters and recent home buyers.
The idea is more popular among people who would benefit from it than those who wouldn’t, but overall public opinion is mixed
When we asked whether it would be a good idea to allow people to access some of their pension savings towards a deposit, we found clear patterns in opinion as well as considerable nuance. It is a widely shared view that there is a pressing need to help more people, especially low-to-moderate income households, to buy their first home. Our survey found that:
- 64% of working-age private renters expect to buy a home in the future, and 31% are actively saving for a deposit.
- Not having sufficient savings for a deposit was one of the main reasons 50% of respondents gave for renting.
- Many more ‘future buyers’ are currently living with family and friends, while 12% of social renters are also actively saving for a deposit.
But when it came to using pensions to enable this, people’s perspectives differed.
‘I think this would work for individuals who struggle to save for a deposit and pay into their pension at the same time. I also think this would work for individuals who are not receiving external support, such as from their family.’ – Nest Insight Housing and Pensions research participant
Some felt allowing households to access some of their pension savings could provide an unparalleled opportunity for people to afford a deposit, especially those who struggle to save due to high rent prices. But by and large, the public questioned whether pensions are the answer to this problem. Or whether using them would be ‘robbing Peter to pay Paul’, as one participant in the discussion forum told us.
‘People shouldn’t have to choose between having a permanent home and having provision in old age… Robbing Peter to pay Paul, homes crisis becomes pension crisis.’ – Nest Insight Housing and Pensions research participant
Overall, a similar proportion of people in our survey thought it was a very or fairly good idea to those who didn’t (38% and 33%). People were more likely to say it was a good idea if they were actively saving for a first home, younger or a private renter, presumably because these are the groups who could benefit most from the proposal. Ethnic minority groups were also more likely to favour the idea than those from white backgrounds.
People were more likely to say it was not a good idea if they were homeowners, on higher incomes, or older households. More than half of homeowners, people with higher incomes and older households opposed the idea, compared to just 20% of younger renters. It’s likely this partially reflects differences in journeys towards home ownership, particularly where those differences are generational. But crucially, they also reflect the role and relative importance of pension savings at different stages in people’s lives – particularly amongst people whose pension income might be lower in retirement than they anticipated.
Despite polarised views on using pensions, there is a widespread understanding of the challenges faced by first-time buyers and shared concerns over the best way to tackle them
When we looked at degrees of support and opposition to the idea, we saw much more nuance than the headlines initially suggest.
Among groups most likely to support the idea, the strength of support people expressed was quite muted. Relatively few people thought it was a very good idea, with most saying it was a fairly good idea. The groups most likely to support the idea were also still likelier to be neutral or say they didn’t know overall. Around half of non-homeowners said the proposal would be helpful to them. One in five renters said they don’t ever expect to have enough pension savings to make it work. Renters with higher incomes were also much likelier to say the idea would be helpful than those with lower incomes. And overall, around 9% of private renters told us this was the only way they would be able to afford a deposit.
Among groups who said it wasn’t a good idea, the degree of opposition was much stronger. As many as half of respondents said it is not a good idea at all, while half said it’s not a very good idea. Homeowners, higher earners and older households were more likely to say it wasn’t a good idea, and they were also much less likely to be neutral or say they didn’t know compared to younger renters and lower income groups. Interestingly, this meant support for the idea didn’t drop significantly even though opposition was greater. This could be for several reasons. Most likely, it supports the notion that there is widespread sympathy across the population for the challenges facing those trying to climb the housing ladder today, including among those who don’t face the same difficulties.
People’s concerns reflected their views on the importance of pension adequacy, and the implications of allowing access to pension savings
Groups from both perspectives shared two common concerns around the proposal:
- the impact upon pension adequacy
- a preference for ringfencing pension savings for retirement income.
Overall, 65% of survey participants, including 60% of private renters, said that they were worried the idea would mean having less to live on in later life. Underpinning this, several people expressed concerns over whether the state pension would be available to them in later life at all, and that consequently there was a greater need to make their own preparation. And more than 40% of private renters told us that they didn’t want to use their pension saving towards a home, or that they wanted to keep their retirement savings separate from everything else.
‘In an ideal world, pensions and property deposits don’t meet, they are not connected and stay separate. I am not in favour of risking people’s financial security in old age to finance something that should be affordable based on their generated income.’ – Nest Insight Housing and Pensions research participant
When we followed up on this in our discussion forum, we learned that many of these concerns originated from a common perspective. Broadly speaking, people liked the idea that more is being done to help first time buyers get on the housing ladder. But there was scepticism and even some cynicism over whether pensions are the right answer. This means that the benefits of the idea will need to be clearly articulated against the risks and the alternatives if it’s something that policymakers choose to take forward.
What does the public think at this stage?
In summary:
- There is widespread support for the underlying need to help more people get on the property ladder. However, any steps to take this specific idea forward will benefit from a clear understanding of who it aims to support, and how they can be supported in decisions they make.
- The idea is more popular with those it could help than those it couldn’t, but the two groups share common underlying concerns. Regardless of their view on the proposal, for many people the idea of using pensions as a deposit marks a fundamental shift in the purpose of pension saving. It’s a concern that policymakers may need to navigate if the policy is to be brought to life.
Our initial findings also raise some fundamental questions:
- Which groups would benefit most from the initiatives?
- What might be needed to support them were the policy to be introduced?
- Will people be better off in retirement if they access their pension savings to buy a home?
We’ll present evidence to unpick these questions in our final report, which is due to be published in early 2026. Between now and then, we will also publish one further update on the work.
Anna Brain, Research Lead at Nest Insight
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