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A bold idea was recently floated by Financial Conduct Authority chief executive Nikhil Rathi: can we unlock pension pots to help fund home deposits?
The idea – mooted in a speech at the JP Morgan Pensions and Savings Symposium delivered on 28 March – is a change that many across the pensions industry have been advocating for, including us here at Wayhome.
We welcome the opportunity it brings to address two major societal challenges: the housing crisis and poor pension engagement.
Yet critics have already been lining up to question the proposal.
Caution is understandable – there are undoubtedly some risks. But let's not pretend that the status quo is harmless.
In the face of the generational unfairness of homeownership and the coming tsunami of retirees trapped renting, the real risk is doing nothing.
Renting into retirement the unsustainable default
The UK has already created a rental generation comprising millions of households who will struggle to retire. Locked out of homeownership by rising prices and rigid lending, many people – particularly younger workers, public sector staff, and ethnic minorities – face decades of renting and pension pots that won't cover their basic needs.
This is not a problem we have decades to solve, it's happening right now. To provide just one example, only 50% of over-60s from the Black community in England & Wales owned their own home at the last census in 2021. The other 50% are renting in retirement right now.
This is a pensions issue as much as a housing one
Using pensions to support homeownership isn't about reckless borrowing – it's about enabling financial resilience. According to the Pensions Policy Institute, owning a home reduces retirement income needs by up to £50,000. That's not a loophole – it's a lifeline.
We're not advocating that people cash out their pensions as collateral for huge loans. Instead, we should be backing smarter models – rent-to-own, shared equity, institutional partnerships – that could allow people to invest their pension in their home and build equity gradually, with lower financial risk.
These solutions exist. They just need support and scale.
The clock is ticking
While we are good at talking about these issues, time ticks on. More people are renting well into midlife. More pension pots are being stretched thinner. And more investors are missing the chance to support scalable, impactful solutions that connect housing and retirement security.
A pension isn't just a pot of money – it's a tool for long-term security. And without secure housing, that security is a mirage. We need to stop pretending housing and pensions can be treated in silos.
Can we afford not to act.
There will always be trade-offs. But continuing with the status quo is a trade-off too – one that future retirees are being forced to make without even realising it.
It's time to reframe the debate. The question isn't whether using pensions for housing is risky. The question is: what happens if we don't?
Nigel Purves is chief executive of Wayhome
