How does a workplace pension effect housing benefit and council tax

meve1 · February 2022

Hi , I have a quick query that I cant seem to find an answer for. I live in rented accommodation and expect to till I die. Therefore I will need to claim housing/council tax benefit when I retire, I live on my own and am not on a great wage and the government workplace takes money from my monthly pay that I really do feel I need. My question is -How does a workplace pension effect any housing benefit ?council tax benefit I may claim when I retire. These benefits are both means tested so will they significantly reduce if I am getting a small amount per month from the government workplace pension . How can I find out by how much. I have tried benefits calulators etc but I can seem to find a definitive answer .Is it worth me struggling now to continue to pay into this.Thanks for any advice

racyguy · February 2022

As with any means tested benefits of which Council Tax Support and Housing Benefit are two ALL income from pensions will be used to calculate the level of the support available.
Obviously the purpose of having a works pension is to provide you with some level of income and therefore reduce dependency on the benefit system.
When eventually you are able to claim Pension Credit the amount will be assessed taking into account your private pensions to arrive at a figure that gives you a minimum income considered to be enough to live on.
Be thankful that you will receive the State Pension and a private one. Many do not have that luxury.

calcotti · February 2022

It is true that small amounts of pension income can be of little value if they simply reduce means tested benefits. However unless you are very close to pension age you can’t be certain about what benefits will be available when you get there.

Remember that when you pay into a pension fund through work your employer is adding money too as is the government. If it is a defined contribution scheme, rather then a defined benefit scheme, then when you reach later life you will be able to withdraw money as a lump sum if you prefer and this may have no impact on benefit entitlement (depending on your circumstances and benefit rules at the time).

racyguy · February 2022

Teddybear12 said:

If meve1 gets a full state pension she will not be eligible for Pension Credit. Why should someone be thankful for getting a State Pension when they have paid enough National Insurance to make them eligible. Also my private pension is paid for by contributions I made while working. So I do not understand your "be thankful " and actually find it quite insulting.

My comment referred to the fact that the individual is to receive the benefit of a works pension. Many I know that worked for over 40 years have had to retire on just the State Pension!

poppy123456 · February 2022

racyguy said:

Teddybear12 said:

If meve1 gets a full state pension she will not be eligible for Pension Credit. Why should someone be thankful for getting a State Pension when they have paid enough National Insurance to make them eligible. Also my private pension is paid for by contributions I made while working. So I do not understand your "be thankful " and actually find it quite insulting.

My comment referred to the fact that the individual is to receive the benefit of a works pension. Many I know that worked for over 40 years have had to retire on just the State Pension!

If you don't contribute to a pension, you won't receive the benefits from it, seems perfectly logical to me.

Gemini0788 · January 15

https://forum.scope.org.uk/discussion/88818/how-does-a-workplace-pension-effect-housing-benefit-and-council-tax

Hi there - did you manage to get any definitive answer to this question? I am in the same position. I'm paying a private pension as a sole trader so no extras going in but it worries me that it will all be taken off me once I retire through losses in housing and other benefits. Is there any point in struggling now if it won't benefit me at all when I retire? It wouldn't make sense at all. Would you great if you've found the answer as I can't find it anywhere either!

Gemini0788 · January 15

OK thank you

monaco12 · October 12

racyguy and poppy123456 didn't understand that if you receive a small works pension, it puts you above the base income that you need, in order to receive Pension Credit and the many benefits that come with that. One is therefore worse off than if one just received the state pension. All your income is put together in order to calculate your housing benefit. If your income is only the state pension, you receive the full housing benefit. Your housing benefit is reduced by the amount your income is above this limit. Therefore you don't gain anything by having a small works pension, it just reduces your Housing and Council tax Benefit.

MW123 · October 12

I would advise anyone not to plan their future around how means-tested benefits work today.

The State Pension age will rise to 67 by 2028 and could go higher. Many people will fall ill before then and getting support will only become harder. More people will be told they are fit for work when they are clearly not.

If someone becomes too unwell to work but does not qualify for sickness benefits, their workplace pension may be the only income they have.

If they meet the rules for early retirement due to ill health, they may be able to access it before reaching State Pension age. It will not be much but it could help them stop working when their health gives out even if the system refuses to help.

By the time they reach retirement, that pension may be gone because it helped them survive when nothing else did. With stricter rules ahead, many will be stuck working and waiting to retire. Those who paid into a workplace pension will likely be glad they did because it will give them something to live on if they become too unwell to work and are still too young to claim their State Pension or qualify for any other support.

How does a workplace pension effect housing benefit and council tax

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