Why a lifetime spent renting will put a big dent in your pension pot

TISA is recommending the government increase total auto enrolment pension contributions to 12%.

Financial planning February 12, 2020 by Tom Bailey

Lifetime renters will run out of retirement money over a decade before homeowners, according to a new research from TISA, which promotes tax-free savings and investments.

The new report, titled ‘Getting Retirement Right: Plan, Prepare, Enjoy’, has modelled several scenarios for UK savers entering the workplace in 2025, to better understand the levels of savings needed to enjoy a “comfortable retirement”.

The report took into account pension contribution levels of 8%, 10%, and 12% and applied them across different scenarios and found that in each scenario, those not on the property ladder were likely to exhaust their pension pot before homeowners.

The starkest difference was between lifetime renters and homeowners who had made 8% contributions to their pensions, with the former running out of money 12 years earlier.

Added to that, the lifetime renters were modelled to run out of pension money five years before the average life expectancy, as it currently stands, at age 86. Even lifetime renters with 10% contributions will run out of money too early.

  Lifetime Renter Homeowners (mortgage paid off at 64)
Contribution at 8% 81 93
Contribution at 10% 84 99
Contribution at 12% 87.5 105.5


According to TISA, these trends are particularly troubling given the seeming trend away from homeownership among millennials and younger generations.

Renny Biggins, retirement policy manager at TISA notes: “We know from trends surrounding home ownership among younger people that renting could become much more common in retirement. Indeed, recent statistics have suggested that up to a third of millennials will be lifetime renters, if things continue as they are.”

He continues: “Current levels of contribution at 8% clearly won’t cut it for those households that don’t own their home.”

However, with the housing crisis unlikely to be solved anytime soon, TISA is recommending the government increase total auto enrolment pension contributions to 12%

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