The green paper on pensions reform the government released two weeks ago sketched out the now-familiar scenario for the pensions timebomb: within a generation many more of us will be on the wrong side of the retirement divide, without having saved adequately to fund our longer, more active lives.

Although Irish pensions coverage has remained stubbornly below the 55% mark, four out of five Irish people still manage to buy homes, even at unprecedented multiples of their salaries. Moreover, upwards of 400,000 Irish households . . . nearly a third of the total . . . own their homes outright. Most of these homes were bought in the pre-boom years before 1991 and mortgages were paid off as incomes rose and the loans became comparatively small.

The people who own these houses will be retiring in the next 20 years. But they won't be leaving their 100% equity to the next generation.

According to research published by the Financial Regulator in February, 40% of people over 50 are considering some form of equity release to supplement (or substitute for) their retirement income.

Attitudes to inheritance are changing too. If Irish people are anything like their British peers, most don't plan on leaving anything for the next generation. A study published by the Joseph Rowntree Foundation in June 2006 found 67% of British people did not intend to leave an inheritance.

These trends have convinced the handful of equity release companies that their business is set to boom in the next decade. Even with the current market correction taking as much as 20% off the price of some homes, property still represents most people's largest asset, meaning it can be a source of retirement income.

"A lifetime mortgage will help those who haven't contributed enough to their pensions, " said Peter Mitchell, chief executive of Seniors Money, an equity release specialist. He acknowledges that the product will eat into any inheritance for the next generation, but argues that the demographics don't stack up for inheritance anyway.

"If the kids need a lump, they probably need it in their 30s when they're buying a house or starting a family, " he says. "If they wait until their 50s when their parents die it's potentially too late. Financial hurdles are overcome by then."

James Wyse, managing director of Residential Reversions Limited, which takes equity stakes in paid-up properties to provide a lump sum to the seller post-retirement, says the real problem is that property still looks more attractive than pensions because of all the fees that get tacked on to retirement accounts.

"Value for money is where it's at. There are so many commissions and margins that the resultant pension often doesn't give enough, " he says. "People are voting with their feet.

At least 500,000 Irish have bought a second property and that's their retirement."

The people who run the pensions business, not surprisingly, are alarmed at the national imbalance between property and pension investment, however.

"Property has always been close to Irish hearts and enjoyed 'safe bet' status, but it's reached 'sure thing' status in people's minds in recent years, " said Frank O'Dwyer, chief executive of the Irish Association of Investment Managers.

"We would have a grave concern that for unsophisticated investors, the vast majority of their wealth is derived from individual home ownership.

People are leveraging off their equity and investing in further property at the expense of other asset classes when all evidence shows a balanced portfolio will deliver the best overall return, " he said.