According to Key Equity Release, the value of the real estate assets of people over 60 is worth three times the entire pension market for defined contributions (DC).
The total home wealth of over-60s is estimated at £2.92 trillion, according to the Office for National Statistics’ Key analysis of pension figures and property assets from Savills.
That’s around three times the total market value of all DC pension assets in Britain, at £950 billion.
Once buying and letting property assets are added, the property wealth of over-60s rises to £3.84 trillion.
Real estate assets typically represent more than 40% of the total assets of households over the age of 60, but this is currently not being fully utilized in retirement planning, Key believes.
Around six in ten (59%) of over-60s currently have some DC pension assets, with the average amount estimated at £102,000, compared to average house prices of around £270,000.
However, around a quarter of over-60s have DC pension funds of less than £25,000.
DC pensions now dominate pension savings in Britain, with around 29 million people owning these pensions, while only 5.76 million people have a defined benefit pension, including 339,000 who are still paying into them.
Key believes the lack of adequate savings in DC pensions will drive expansion for the US later life loans market.
Key Equity Release chief executive Will Hale said: “The colossal move to DC in the UK pensions landscape dramatically illustrates why real estate assets are becoming increasingly important in retirement planning.
“Over-60s approaching retirement with modest DC pension pots need to look at all their assets and consider all options to fund their wants and needs in retirement. Real estate assets need to be part of the mix.
“Given that real estate assets typically represent more than 40% of household wealth and the value of the home equity of people over 60 massively exceeds the market value of all DC pension assets, it is important that advisers and clients consider all their options.”