Pensions experts warn renting poses threat to retirement

An older woman following a path through a park featuring a couple sat on a bench

According to a recent report issued by the Pensions Policy Institute (PPI), the rise in private renting now poses a potential threat to retirement outcomes of UK savers and the country’s pensions system.

The PPI described the recent changes in patterns of home ownership as a fissure opening below the pensions system that could compromise retirement sufficiency by the year 2040 and beyond. This could, in turn, affect over a million pensioner households.

UK savers preparing for retirement often rely on specialists in retirement planning in Shropshire, Hampshire and other parts of the country for advice. Financial experts like wealth managers assist consumers with both pre- and post-retirement planning that is tailored to their individual needs and goals.

Employing the UK Pensions Framework, the PPI carried out a policy simulation with the aim of exploring the risks represented by increased private renting, declining home ownership, and the diminishing social housing sector to the retirement outcomes of people nearing pension age.

The results showed that should the current trends in home ownership for 45- to 64-year-old people continue all the way to retirement, and providing that other factors stay the same, the percentage of households with a home of their own in retirement could drop by 17 per cent.

The PPI also noted that only a few renters would likely have sufficient savings to cover the combined costs of renting and living in later life. As a result, it estimated that around 400,000 households could potentially become reliant on income-related benefits for pensioners.

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