Marvin OnumonuThere is strong support from defined contribution (DC) pension savers for putting their pension money into affordable housing, research from Legal & General (L&G) has found.
Out of more than 4,400 savers surveyed, 97% said affordable housing was an important social issue.
One in five (20%) savers said they did not own a home and did not think they ever would.
Of renters, 8% believed they would not need any extra savings in retirement.
Most renters underestimated what they would need for retirement compared to homeowners, with 90% of those giving an estimate falling short by as much as £150,000.
Industry forecasts showed that retirees who rent may need around £400,000, due to rising rents and longer retirements.
The Pensions Policy Institute (PPI) has warned that by 2041, 3.6 million households will be renting in retirement, including 1.7 million in the private rented sector (PRS).
More than 65% of respondents said affordable housing to rent was a ‘critical’ issue, and this rose to 80% among renters.
More than a fifth of renters said it should be the Government’s top priority.
Responses for affordable housing to buy were similar – 60% of savers would engage more with their pension if they knew their money was helping with real-world issues like housing.
54% said they would pay more for a pension if it went towards building affordable housing, rising to 67% among Gen Z.
83% said they would pay over £50 more a year, and 33% said they would pay more than £100 extra.
Jayesh Patel, head of UK DC distribution at L&G, said: “The rise of renters in retirement underscores the urgent need for more affordable housing solutions.
“Our latest research demonstrates the power of private markets to deliver the change which savers wish to see.
“For asset managers and providers there is an opportunity to deploy DC capital towards creating homes for those most in need, while for members, they get to invest in initiatives that directly improve the communities in which they live.”
Patel added: “It is incredibly positive to see DC members support allocation to this critically important sector.”
Ali Farrell, head of impact strategies – real estate, asset management at L&G, said: “A lack of affordable housing is a crisis which affects millions of people across the UK.
“We believe there is a compelling investment case for investing in affordable housing, an asset class which aims to generate a stable, inflation-linked cashflow alongside meaningful societal benefits in local communities.
“The research supports L&G’s commitment to mobilising pension capital towards an area of acute societal priority – helping savers with their current housing needs, as well as securing their retirements.”
