In its report, The Home Belongs in the Plan, produced with Technical Connection and Ad Lucem, the later life lending platform said adviser conversations must examine the possibility that unused pensions will be part of a person’s taxable estate.
This change will come in from April next year and will see a person’s unused pension and death benefit included in their estate for inheritance tax purposes.
The report suggests that, according to market data from the Financial Conduct Authority (FCA), the value of money withdrawn from pension pots rose 36% annually to £70.9bn, while the value of tax-free cash withdrawn totalled £18.08bn, a 60.7% rise.
Air said this revealed that families were bringing liquidity decisions forward when thinking about how to fund retirement, gifting and legacy plans.
The firm said pension funds would help some people with financial planning, but for others, this would not be enough to reach certain goals.
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The report also cited research that showed that nearly half of homebuyers aged under 35 received financial help from family in 2024, supporting around 335,000 house purchases.
Air said it was getting harder to have holistic planning conversations without recognising the value of housing wealth. The Equity Release Council (ERC) estimates housing equity in the UK is at £5.7trn, with £3.4trn held by the over-55s.
However, the report notes that the use of housing wealth may not be suitable for everyone, highlighting the need for advice.
Air said an advice process that is aligned with Consumer Duty considers alternatives, explains costs and trade-offs plainly, tests and records client understanding, and uses referrals where appropriate.
Tony Wickenden, founder and managing director of Technical Connection, said: “Clarity over ‘the numbers’ is absolutely essential before any decisions are made, but it also has to be recognised that the role of financial planning is to help clients achieve what is important to them in life. Families don’t live on spreadsheets. Many clients want to support children and grandchildren at pivotal moments – but they’re understandably wary of dismantling portfolios or compromising their future financial security.
“The point isn’t to push a product; it’s to build a disciplined, repeatable way to weigh options, explain trade-offs and document understanding so decisions are genuinely informed… and [that], when appropriate, incorporate at least a consideration of how the main residence and later life lending could be used.”
Will Hale, CEO of Air, added: “With pensions set to fall into inheritance tax from 6 April 2027, the old sequencing rules are being rewritten and ‘which pot do we spend?’ has become one of the most consequential questions families will ask. This is a question advisers can’t afford to answer on autopilot.
“Our aim is to equip advisers with the insight, tools and support to bring the home into that conversation safely – whether that means establishing referral partnerships or building capability over time.”
