Pension and benefits consultancy firm Broadstone looked at government data. It found that based on the Pensions and Lifetime Savings Association (PSLA) standard of having a moderate income of £23,300 per year in retirement, 71 per cent of renters were not expected to reach this.
The gap widened when it came to the proportion of renters who were not expected to have a minimum income of £12,000 a year in retirement.
Broadstone found that a quarter of renters would be unable to achieve this, compared with eight per cent of homeowners.
As for PSLA’s definition of a comfortable retirement income of £37,300 a year, 86 per cent of homeowners and 93 per cent of renters are unlikely to attain this.
Single people also fare worse than couples, as the data showed that 19 per cent of single people were unlike to reach the minimum income standard compared to eight per cent of couples.
Further, 14 per cent of people who will reach state pension age this decade will not meet the minimum income standard. This is a higher proportion than any other age group.
Damon Hopkins, head of DC workplace savings at Broadstone, said: “The gap between homeowners and renters is a stark reminder of the wider financial benefits that homeownership can bring, as well as the difficulties that those struggling to get on the housing ladder face.
“With many renters trying to save up to get on the housing ladder while paying rental prices that have surged since the pandemic, it is unsurprising that pension contributions may slip further down the order of priority.
“The cultural and financial importance placed on property ownership has not only boosted prices further but meant that for many people other financial goals are compromised. It clearly points to the improvements needed in the auto-enrolment system which go beyond the homeowner versus renter dichotomy.”
He added: “We also need better governance around investment strategies to ensure that the hard-earned money people are putting into pensions is performing for their later life.
“Other initiatives like improving financial education will further help people recognise the importance of accumulating adequate later life savings.”
