Push to make homes part of retirement funding in the UK

The Financial Conduct Authority has urged the later life lending market to make housing wealth a “fourth pillar” of retirement funding in the UK, sitting alongside the state, workplace and personal pensions most people rely on.

Emad Aladhal, the FCA’s Director of Retail Banking, made the call in a speech to the Later Life Lending Summit on Tuesday (16 June), telling industry leaders that accumulated property wealth should become a mainstream option for funding retirement “both by choice and necessity.”

Aladhal said consumers planning for retirement typically look only to the “three pillars” of the state pension, workplace pensions and personal pensions, and rarely consider how their home could help.

He argued there was no reason planning should stop there, rather than drawing on all the assets a consumer holds.

The FCA pointed to a widening retirement income gap as the reason the issue can no longer be ignored.

Aladhal cited Pensions Commission findings that 15 million working-age adults will not have the retirement income they aspire to, warning that many people will reach retirement without grasping the scale of the shortfall they face.

He framed housing wealth as more than a way to plug that gap. For some consumers it could fund home improvements that allow them to stay in their own home, or meet care needs, while for others it is a way to manage their estate or gift money to family.

A massive market

Aladhal cited Fairer Finance research suggesting that by 2040, 51% of households aged 60 and over could benefit from accessing their housing wealth in retirement through later life lending, holding an estimated £4.3 trillion in housing wealth between them.

The same research estimates this could unlock around £23 billion each year in today’s prices – many times the size of the current market.

Despite that, Aladhal said the market is not yet positioned to deliver at scale.

FCA data shows that of almost 330,000 mortgages advanced to over-55s in 2025, only 9% – around 30,000 contracts – were lifetime mortgages or retirement interest-only products.

He attributed this to problems on both sides of the market. On supply, current engagement levels suggest the market may not be ready for future demand.

On demand, he said consumers too often engage only when under financial pressure and feel their options are limited, with advice frequently failing to consider later life options for retirees.

Aladhal was critical of how advice is structured, describing a market split into silos for mortgages, pensions, investments and later life planning, with advisers often not working together to reach a holistic outcome.

He said the FCA wants to see advice that supports informed decision-making across all available options, and that referral models should be a starting point rather than the end goal.

Next steps

Aladhal confirmed that the FCA is consulting on retirement interest-only affordability, which it believes could allow the product to play a larger role.

It will hold workshops this summer to explore what it would take to make more holistic advice a reality.

It is also running a focused market study into the later life mortgage market to examine how the sector is meeting changing consumer needs and how consumers navigate between mainstream and later life options.

Aladhal said regulation could address some of the barriers but could only take the market so far, telling the sector it was well placed to shape what the fourth pillar becomes in practice.

He closed with a direct call to the industry to “step forward,” warning that if it did not, others would step in to define the market’s future.

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