Tighter eligibility criteria introduced for the housing allowance for pensioners
For persons receiving housing allowance for pensioners, income and assets will have a greater effect in reducing the allowance starting from 1 January 2025. An indexation freeze that was put in place earlier will also be extended. This means that the amounts of heating, water and maintenance costs and the maximum housing costs recognised in the pensioners’ housing allowance scheme will not go up in 2025.
Summary:
Tighter eligibility criteria for the housing allowance for pensioners:
Income will reduce the housing allowance more than it does at present, and assets will have a greater effect on the allowance.
The change will take effect on 1 January 2025 and will be phased in gradually as the customers’ housing allowances are reviewed.
Kela periodically reviews the housing allowance for pensioners. The review is carried out when two years have passed since the housing allowance was granted or last reviewed If your situation changes, apply for a review of the housing allowance for pensioners. Apply for a review for instance if you move out a home for which you were granted housing allowance or if there is a significant change in your income (an increase of EUR 1,018 or more or a decrease of at least EUR 509).
If you have assets in excess of specified limits after deduction of debt, the assets that count as income will be included in your total income for purposes of determining if the income has changed significantly. Under the new rules, a greater portion of assets counts as income.
Parliament has approved a proposal imposing tighter eligibility criteria for the housing allowance for pensioners.
Under the new criteria, income will reduce the amount of the housing allowance for pensioners more than it does at present. A basic deductible and an additional deductible are deducted from the housing costs recognised under the housing allowance scheme. The basic deductible is the same for everyone. The additional deductible is applied only if the income limit is exceeded. Starting from 1 January 2025, the additional deductible will be 43.5% of income exceeding a specified limit, up from 41.3%. The income limits for the additional deductible will stay the same.
With the lowering of the asset limit, assets will have a bigger effect on the housing allowance for pensioners. Any assets exceeding the asset limit affect the amount of housing allowance. The new limits are as follows: for persons living alone, EUR 15,000 (currently EUR 18,306) and for married or cohabiting couples, EUR 24,000 per couple (currently EUR 29,290).
Assets affect the housing allowance for pensioners: part of the assets are counted as income, and this income reduces the amount of housing allowance. The percentage of assets that counts as income will also be raised. Starting from 1 January 2025, 15% of assets in excess of the asset limit will count as income for purposes of the housing allowance, up from 8%.
The indexation freeze on the housing allowance for pensioners will be extended. The amounts of the recognised heating, water and maintenance costs or maximum housing costs will not increase in 2025 but will stay the same as in 2023 and 2024.
Background to the changes in the housing allowance for pensioners and their impact
The changes are made for the purpose of balancing government finances. The adjustment of the additional deductible and the introduction of stricter asset rules are aimed at targeting the assistance to pensioners with the lowest incomes, fewest means and greatest needs.
The changes will impact about 203,000 recipients of the allowance. On average, allowances will be reduced by about EUR 15.60 per month. Allowances for around 7,600 current recipients will be discontinued altogether. The changes will generally affect women more than men.
The tighter rules will specifically impact customers who have assets or a higher income. The reduction in the housing allowance will be compensated for customers who receive social assistance. The changes will save the state EUR 38.4 million but will increase spending on social assistance by EUR 0.4 million. Further, they will reduce payments to wellbeing services counties for assisted living services by EUR 12.6 million. The total savings in public spending are estimated to be EUR 25.4 million.