Marvin OnumonuPension withdrawals rose by 36% to £70.9bn in 2024/25, with tax-free cash taken jumping 60.7% to £18.08bn, according to a report from Air, produced with Technical Connection and Ad Lucem.
The report said increased inheritance tax pressure is making advisers rethink which assets families use to fund retirement and gifting.
Among under-35 homebuyers, nearly half got help from family in 2024, with the average contribution at £27,500, supporting about 335,000 purchases.
The report stated that pension withdrawals alone may not be enough for planning goals, and the family home should be considered as part of the balance sheet, especially when liquidity is tight.
Data from Equity Release Council put UK homeowner equity at £5.7tn, including £3.4tn held by over-55s.
According to the report, using the home won’t suit everyone, but for some, it can help achieve “today” outcomes, with the need for clear advice, explanation and documented understanding because later life lending brings costs and can reduce inheritance.
Tony Wickenden, founder and managing director of Technical Connection, said: “Clarity over ‘the numbers’ is absolutely essential before any decisions are made but it also has to be recognised that the role of financial planning is to help clients achieve what is important to them in life.
“Families don’t live on spreadsheets. Many clients want to support children and grandchildren at pivotal moments – but they’re understandably wary of dismantling portfolios or compromising their future financial security.
“The point isn’t to push a product; it’s to build a disciplined, repeatable way to weigh options, explain trade-offs and document understanding so decisions are genuinely informed…and which, when appropriate, incorporate at least a consideration of how the main residence and later life lending could be used.”
Will Hale, CEO of Air, said: “With pensions set to fall into IHT from 6 April 2027, the old sequencing rules are being re-written and ‘which pot do we spend?’ has become one of the most consequential questions families will ask.
“This is a question advisers can’t afford to answer on autopilot.
“Our aim is to equip advisers with the insight, tools and support to bring the home into that conversation safely – whether that means establishing referral partnerships or building capability over time.”
The report said best practice is keeping alternatives on the table – cash, portfolio sales, pension withdrawals, downsizing, family loans or doing nothing – explaining costs and trade-offs in plain English, and testing client understanding.
