Key Equity Release calls for a holistic approach to financial advice for older homeowners, urging the integration of later-life lending considerations with tax-free pension withdrawals in light of rising flexible pension access and upcoming inheritance tax changes.
Later-life lending should be discussed alongside tax-free pension withdrawals, according to Key Equity Release, which argues that older homeowners need advice that looks at the full picture rather than treating pensions and property separately. The firm says people over 55 who are considering using pension cash to clear mortgage debt may be better served by guidance that weighs up retirement income, housing wealth and borrowing options together.
The call comes as flexible pension access continues to climb. HM Revenue & Customs data reported by Corporate Adviser shows taxable flexible withdrawals reached a record £22.4bn in the 2025/26 tax year, up from £18.6bn the year before, with 1.27 million people making withdrawals. In the first quarter of 2026 alone, 770,000 savers accessed £5.9bn through 1.9 million payments, and the average taxable withdrawal rose to £7,700.
Key said the jump in withdrawals is being shaped in part by planned inheritance tax changes due from April 2027, when unused defined contribution pension funds will be brought into estates. The company warned that taking the maximum tax-free lump sum can make sense for many savers, but may also leave them with less retirement income if they stop working and are no longer paying into their pensions. It argues that later-life lending, including lifetime mortgages, can offer another way for homeowners to deal with mortgage debt without immediately drawing down pension assets.
The broader debate reflects a growing push to join up housing and retirement policy. The Society of Pension Professionals has previously called for better coordination between the two, saying it could help reduce the risk of financial shortfalls in later life. Key chief executive Will Hale said the surge in full lump-sum withdrawals meant many people were making decisions under the influence of the forthcoming tax rules, but warned that homeowners who do not consider later-life lending may fail to make the best use of both their property and pension savings.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
