McPhail on how UK’s housing wealth can fix the retirement cost of living crisis


Tom McPhail

Tom McPhail has produced some radical proposals for reform of the Equity Release market. Here they are. Launched on pension credit awareness day, they are welcome indeed/


The UK has an annual retirement income shortfall of £48 billion

  • Better use of housing wealth could reduce the cost of living crisis
  • UK’s pensioners are missing out, due to industry, government and regulatory failings
  • Industry’s poor reputation lags behind recent improvements (but there is still more to be done)
  • Pension Wise retirement guidance should include housing wealth
  • Scrap the £175,000 main residence IHT allowance

A new policy paper on the use of housing wealth in retirement shows there is an estimated annual retirement income shortfall of £48 billion a year. The report calls on the government, the financial regulator and the financial industry all to do more to help improve the standard of living of the UK’s pensioners. You can access a copy of the report here

Drawing on data from the Office for National Statistics and the Pensions and Lifetime Savings Association, the report estimates the UK’s retired population has a £48 billion annual shortfall in retirement incomes; a situation which will only be exacerbated by the cost of living crisis in the short term and declining guaranteed incomes in the longer term. The calculated shortfall is based on comparing median household incomes with the PLSA’s moderate income targets.

The paper, written by Tom McPhail of the lang cat and sponsored by Responsible Life and Royal London, calls for a cross-sector response to address the failure of the financial system to help the UK’s retired population make best use of their housing wealth.

Tom McPhail comments

“The UK has almost as much wealth in housing as it does in pensions; over the past 20 years we’ve seen innumerable policy initiatives on pensions, while housing has been largely ignored: Politicians and the FCA have a massive blind spot when it comes to making best use of housing wealth. The FCA regulates equity release as a mortgage, rather than as an asset to drawn on in retirement; advisers are free to simply ignore it if they choose and this makes no sense.”


“The industry has done a great deal to put its house in order over the past 20 years; it’s not perfect but it is much better than it used to be. It’s time for policymakers to recognise the huge potential in this sector to help the cost of living crisis and the levelling up agenda. They should work with the industry to help improve people’s standard of living.”

The report calls for tougher regulation of retirement advice, including more training and the requirement to disclose whether housing wealth is being considered when giving retirement income advice. It challenges the government to look at delivering better financial guidance through the Money and Pensions Service.

The report also suggests the £175,000 main residence IHT allowance should be scrapped, on the grounds some home owners could be disincentivised from drawing down on their housing wealth. Tom McPhail comments:

“I’d like to see a review of inheritance tax allowances and rates, including the tax treatment of people’s main residence and their pension pots too; it appears some rules actively discourage the effective use of this accumulated wealth in later life.”


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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