The paper, titled Home Truths: Rethinking Retirement Wealth, highlights a critical structural mismatch in the UK economy.

It warned that the UK can no longer treat housing and pensions as separate policy issues if it hopes to solve the growing retirement adequacy crisis.

The report found that homeownership rates fell from 71% in the early 2000s to around 65% in 2024/25, while 31% of future retirees are expected to fall below the Pensions UK minimum retirement living standard (RLS).

The SPP claimed that by 2040, 2.2 million people are expected to be private tenants and a further 1.8 million will be social tenants, while 12.9 million aged 65 and over are projected to be owner-occupiers.

UK retirees currently hold an estimated £3.84 trillion in housing wealth, yet face an aggregate annual retirement income deficit exceeding £48 billion.

The group claimed that many current retirement planning models relied on the outdated assumption that most individuals will retire mortgage-free, pointing to a decline in homeownership rates and a sharp increase in lifelong renters. 

It claimed renters would require an additional £269,000 in pension savings to cover rental costs.

The SPP warns that fragmented advice, separate regulatory regimes, and tax barriers like stamp duty prevent people from making decisions about their wealth.

It called for the RLS and value for money framework to be updated to account for rental and mortgage costs later in life and for housing wealth to be integrated closely with retirement guidance.

It suggested that once pensions dashboards are fully established, housing wealth could be incorporated to provide savers with a combined view of their later-life resources.

The SPP recommended improving planning certainty, increasing the visibility of the housing pipeline, and developing standardised investment vehicles, which could make residential housing more accessible to institutional investors.

It added that pension capital could play a greater role in increasing UK housing supply, stressing capital availability itself was not the main constraint on institutional investment.

It argued pension schemes required projects that were scalable and deliverable and could be assessed within conventional investment risk frameworks.

But it warned that “pension capital cannot substitute for effective housing policy”, explaining that the measures aimed at increasing access to housing finance could increase affordability pressure unless they are accompanied by an increase in supply.

The SPP estimates that around 7,000 retirement homes are built each year, compared to the recommended 50,000 target. 

Amanda Cooke, chair of the SPP financial services regulation committee, said: “Pensions and housing draw on the exact same household resources, yet policy treats them as completely separate worlds. 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.”