Nest Insight has urged caution on proposals to allow people to use their pension savings to enter the housing market, after new research showed the public to be split on the idea.
The research group, which is attached to the Nest defined contribution master trust, found that four in 10 (39%) of people believe using pension savings towards home ownership is either a “fairly good” or a “very good” idea.
However, a third (33%) said this was either “not a very good idea” or “not a good idea at all”.
Respondents indicated a preference for preserving pension savings for retirement, while some doubted that allowing early access to pension pots would address the wider housing crisis.
Others objected to the idea of trading off housing security against retirement income, or expressed concern that using pensions for home ownership could become an expectation rather than a choice in future.
“To support the financial security of low- and moderate-income households, we need to take a holistic view of household finances and the products and services people use.”
Will Sandbrook, Nest Insight
Renters also highlighted that the lack of a deposit is only one barrier among many that they face, with mortgage affordability also being a major obstacle.
Will Sandbrook, managing director of Nest Insight, said the last couple of years have seen a rising number of proposals emerging to allow people access to their pension savings in some way, to support purchasing a home. However, he said there had been a lack of robust, UK-specific evidence for whether and how approaches could be applied.
He added: “That’s why we embarked upon this research. It doesn’t address all angles and never could have. Nor does it come down clearly in favour of or against the idea – that wasn’t our goal.
“But what emerges is a considerable degree of nuance and a clear set of questions and trade-offs that need addressing before a clearer case for or against could be made.”
The findings are a part of Nest Insight’s year-long Housing and Pensions project, which brought together a range of data, including a nationally representative YouGov survey of 4,200 people, online discussions and interviews, and data analysis based on the Office for National Statistics’ Wealth and Assets Survey.
“To support the financial security of low- and moderate-income households, we need to take a holistic view of household finances and the products and services people use,” Sandbrook said. “Viewing ‘pensions’, ‘emergency savings’ and ‘debt’ as unrelated product categories or policy areas doesn’t reflect the realities of people’s lives, especially those dealing with scarcity and financial volatility.”
In the UK, home ownership has declined sharply over the past 20 years, driven partly by the growing challenge of saving for a deposit.
According to data from the Ministry of Housing, Communities and Local Government, the share of households renting privately has more than doubled, from 11% in 2003-04 to 24% in 2023-2024. If this trend continues, the share of households renting privately in retirement could more than double from 6% today to around 17% by 2041, according to the Pensions Policy Institute.
This would represent a major shift towards renting in retirement and could put additional financial pressures on older people, with many expected to face financial hardship.
In the wake of the relaunch of the Pensions Commission last summer, the Association of Member-Nominated Trustees urged the commissioners and policymakers to incorporate housing and rental costs in their work, given the increasing number of people who are expected to be renting in retirement.
Liz Kendall, then the work and pensions secretary, acknowledged at the time that paying rent or mortgage costs in retirement was a major cause of the “tsunami of pensioner poverty that is coming our way”.
