Housing benefit rules discourage pension saving for older renters, says PPI

Current housing benefit rules offer little incentive for pension saving, as renting in retirement is expected to grow, according to The Pensions Policy Institute (PPI).

The report found that 330,000 pensioners who would be eligible for housing benefit lose or see their entitlement reduced due to private pension income, with an average weekly reduction of £50.

Housing benefit spending could rise by £3.4bn by 2044, reflecting a 14% fall in home ownership rates. 

John Adams, senior policy analyst at the PPI, said: “The interaction between Housing Benefit rules and private pension income is working against eligible retirees, at a time when more pensioners facing spiralling retirement rental costs. 

“With housing costs in retirement set to look markedly different to the last generation, policymakers will need consider how they reach the right balance to ensure Housing Benefit support works as intended.”

Joanna Elson, CEO 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.

“To prevent more older renters on low incomes being dragged deeper into financial hardship, we’re urging the Pensions Commission to recommend changing the eligibility criteria for Housing Benefit, so small amounts of private pension income are disregarded.”