Govt to tighten housing allowance criteria for pensioners from January

The four-party alliance government led by Kansallinen Kokoomus (National Coalition Party-NCP) proposed that, as of 1 January 2025, income and assets will reduce the housing allowance for pensioners more than they do at present, said the Social Insurance Institution-Kela in a press release on Wednesday.

The earlier index freeze will also continue. This means that the amounts of heating, water and maintenance costs and the maximum housing costs taken into account in the housing allowance for pensioners will not be increased in 2025.

The government proposed that the conditions for granting the housing allowance should be tightened in different ways such as income will reduce the amount of housing allowance for pensioners more than it does at present.

A basic deductible and an additional deductible are deducted from the housing costs taken into account for the housing allowance for pensioners. The basic deductible is the same for everyone.

The additional deductible is applied only if you exceed the income limit.

The additional deductible is currently equal to 41.3 per cent of your income exceeding the income limit. The Government is proposing to raise the additional deductible to 43.5 per cent.

The income limits for the additional deductible would stay the same.

The government is proposing to lower asset limits for housing allowance for pensioners. Any assets exceeding the asset limit affect the amount of housing allowance. The new asset limits would be for persons living alone, EUR 15,000 (now EUR 18,306), for married or cohabiting couples, EUR 24,000 per couple (now EUR 29,290 per couple).

Assets affect the housing allowance for pensioners as income will be calculated based on the part of the assets that exceeds the asset limit, and this income reduces the amount of housing allowance.

The government proposed to increase the percentage of assets counted as income.

At present, 8 per cent of assets exceeding the income limit are taken into account as income. Going forward, 15 per cent of assets exceeding the income limit would be taken into account as income.

The index freeze applied to the housing allowance for pensioners will continue as the amounts of heating, water and maintenance costs and the maximum housing costs taken into account in the housing allowance for pensioners will not be increased in 2025. The amounts will stay the same as in 2023 and 2024.

According to the proposal, the changes are intended to take effect as of 1 January 2025 and will be gradually phased in as the customers’ housing allowances are reviewed.

The housing allowance for pensioners is reviewed annually when 2 years have passed since the housing allowance was granted or last reviewed.

The housing allowance must also be reviewed if, for example, the recipient moves to a new home or experiences a change in income or family circumstances.

The proposed legislative amendment has yet to be approved by Parliament.