The study, based on a survey of over 4,400 DC pension savers, reveals millions of renters could be heading into retirement with a financial blind spot, underestimating how much they’ll need in later life compared to homeowners.
It found one in five (20%) pension savers currently do not own their own home and think they never will. And despite the extra costs of renting, 8% of renters believe they won’t need any additional savings in retirement. Among those who did estimate a gap, the vast majority (90%) significantly underestimated the amount they would need compared to homeowners, often by hundreds of thousands of pounds. Most thought they’d need £250,000 extra or less – £150,000 short of industry forecasts, which suggest retirees who rent may need closer to £400,000 driven by rising rents and longer retirements.
The findings come as The Pensions Policy Institute warns that 3.6 million households will be renting in retirement by 2041, including 1.7 million in the private rented sector.
The data underscores the critical need to boost supply of affordable housing to account for the growing number of individuals renting into retirement. Investment in affordable housing not only addresses the supply side demand, but it also works to engage savers with their pensions by investing in initiatives which can improve the local communities in which they live and work.
L&G’s research found that over 65% of respondents identified affordable housing to rent as a 'critical' issue, rising to 80% among renters, over a fifth of which felt it should be the government's top priority. The findings were similar for affordable housing to buy.
The survey also found that 60% of savers said it would make them want to engage more with their pension if they knew their money was helping to solve real-world problems like housing. Over half (54%) said they’d be willing to pay more for a pension if it was building affordable housing, rising to 67% among Gen Z. Four out of five (83%) said they’d be willing to pay more than £50 extra a year and one in three (33%) said they would pay more than £100 extra.
Currently, 1.3 million people sit on local authority waiting lists for social housing. DC pension capital can play a crucial role in the funding required to meeting national housing needs, with the industry’s Mansion House Accord commitments to increasing private markets investment highlighting growing investment into the sector.
In July 2024, L&G launched its Affordable Housing Fund (“the Fund”), dedicated to the development of high quality, sustainable affordable housing to tackle the UK’s housing crisis. It has attracted strong investor interest, demonstrating the attractive proposition that the asset class offers – raising £510m as of February 2025.
The Fund is available to DC savers through the L&G Lifetime Advantage Fund and from the end of July via L&G Private Markets Access Fund, designed to offer DC schemes access to a diversified range of private market investments.
Jayesh Patel, Head of UK DC Distribution, L&G: “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. 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, L&G: “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.”
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