Pension scandal as 330,000 pensioners pushed into hardship by 1 DWP benefit | Personal Finance | Finance
New research has found that around 333,000 pensioners will be “dragged into financial hardship” by the Housing Benefit system. The research, by the Pension Policy Institute (PPI), finds that retired people who are saving into private pension pots are losing out on the benefit even though they are eligible.
The research found that people are on average losing around £50 per week in reduced or eliminated entitlement. The study called Do Pension Savings Pay? was funded by Independent Age. It found that for every £1 of private pension income a retired person receives, their Housing Benefit is cut by 65p, leaving just 35p of genuine benefit to their disposable income.
The PPI estimates that Housing Benefit expenditure will surge by £3.4bn over the next two decades.
The expected rise is driven by two trends – a growing population of retired people and a sharp decline in pensioner home ownership.
One in three pensioner households is expected to rent rather than own their own home by 2044. This marks a huge shift from previous generations.
The PPI suggests a disregard mechanism that would shield a portion of private pension income from the 65p taper rate applied in Housing Benefit calculations, reports GB News.
The new model would offer a £25 weekly disregard for a retiree receiving the full State Pension. It would also offer £100 per week in private pension income. This would boost disposable income by £16.25 per week by increasing their Housing Benefit eligibility.
John Adams, PPI senior policy analyst and lead author of the research, said: “The interaction between Housing Benefit rules and private pension income is working against eligible retirees, at a time when more pensioners are facing spiralling retirement rental costs.
“With housing costs in retirement set to look markedly different to the last generation, policymakers will need to consider how they reach the right balance to ensure Housing Benefit support works as intended.”
Joanna Elson, CBE, Chief Executive of Independent Age, said: “As this important research shows, the Housing Benefit system isn’t working for older renters on low incomes, especially those with small pensions.
“Reducing the already inadequate rental support they receive is a disproportionate response to the tiny amounts of income the pensions provide.”
Housing Benefit can help you pay your rent if you’re unemployed, on a low income or claiming benefits. It’s being replaced by Universal Credit.
You can only make a new claim for Housing Benefit if either of the following apply:
