Dr Priya Khambhaita: There is a fresh need to better understand how housing costs, workplace pension participation, and household finances interact, especially at key moments in life.
The latest of the Pensions Policy Institute’s (PPI) regular columns discusses a significant research project it is conducting in partnership with the Association of British Insurers.
Against the backdrop of the Pensions Commission's revival, a renewed focus on auto-enrolment (AE) contributions and the deepening crisis of under‑saving, there is also a fresh need to better understand how housing costs, workplace pension participation, and household finances interact – especially at key moments in life, such as changes in relationship status.
To deliver a clearer picture of this important policy area, three interconnected areas must be considered together – housing and retirement adequacy; household composition; and AE.
However, there is also one other major line of inquiry that cuts across all three of these strands.
Intergenerational wealth transfers
Intergenerational wealth transfers and their role in shaping retirement outcomes matter because such transfers are deeply tied to questions of social mobility, fairness, and vulnerability – playing a significant role in determining who is able to build financial security in later life and who faces greater risks in retirement.
How support is passed down within families, whether through gifts, ongoing financial help, or inheritance affects people's chances of owning a home, managing housing costs, and saving adequately for later life.
Interrogating the role of these transfers will fill a critical evidence gap – and understanding who receives support, at what life stages, and how that support might influence savings and housing choices could provide policymakers with a more accurate picture of future pension adequacy across different demographic groups.
Housing and retirement adequacy
Pensions policy has for many years rested on an implicit assumption: that older age is accompanied by outright homeownership, mortgage‑free security and mainly predictable housing costs into retirement. However, there is a significant shift in later‑life housing patterns and more people now enter retirement while renting.
Factors to do with mixed job market opportunities and low wage growth, differing transitions into adulthood and changes in partnership formation, alongside variation in access to affordable housing, have all disrupted access to the property ladder.
Subsequently, the expectation that most people will have secured housing security by retirement no longer holds. Upcoming insights will explore what an ageing population of renters could mean in practice in relation to questions around affordability, stability and financial wellbeing.
Household composition
Household structure and composition in the UK are changing as economic pressures and demographic shifts reshape living arrangements.
More adult children are remaining in the parental home for longer due to rising rental costs, longer participation in higher education, and barriers to securing stable employment.
At the same time, more older people are flat‑sharing or choosing other non‑traditional living arrangements as a way to manage costs.
Against this backdrop, adequacy is often considered on an individual basis, focusing on required contribution levels and replacement rates.
However, these assumptions warrant further interrogation in light of inter‑dependent household arrangements.
Auto-enrolment
Building on the success of AE, the next phase of reform could focus on how the system evolves to better reflect changing working lives.
This includes considering a move to higher contribution rates, weighing the consequences of a uniform increase against a tiered approach linked to life stage, in order to improve long term adequacy.
There is also scope to explore the introduction of credits as a potential solution for persistently under pensioned groups, particularly carers and women, helping to address enduring pension gaps and ensure the system supports individuals across the full life course.
Pathways to potentially actionable solutions
With the Pension Commission's interim report expected later in 2026, the PPI is undertaking a significant new research project to explore these areas, sponsored by the Association of British Insurers.
The project comes at a pivotal moment when policymakers are seeking robust, forward‑looking analysis to inform recommendations expected in the commission's report.
Working on issues that cut across retirement saving and real-world retirement outcomes is both challenging and rewarding.
These areas are not stand alone – they overlap and influence each other in ways that matter to millions of people, especially within the UK pensions system that links directly to educational trajectories, earnings and careers, health and disability status, and social care.
Bringing the housing, household composition, and AE strands together, understanding the challenges they create, and – most importantly – interrogating the evidence that points to practical solutions is essential if the system is to work better for everyone.
Dr Priya Khambhaita is head of research at the Pension Policy Institute
