Pensioners have become so laden with debt that the number filing for bankruptcy has increased eight-fold in five years. Campaigners are blaming the worrying rise on a combination of cheap credit, soaring living costs and the complicated benefits system.
Nearly 8,000 people aged 65 or over took the ultimate financial sanction last year and sought bankruptcy – up from 900 in 2002. The figure is just one of a series of statistics this week showing the growing financial burden and consequences of an ageing population.
The number of centenarians in England and Wales has reached a new high and is forecast to pass 40,000 by 2031. Councils fear that services for the elderly will have to be cut unless the Government finds an extra £2.7bn over the next three years to fund the growing demand for state care.
A predicted increase of 400,000 in the number of older people by 2010 will place an unbearable burden on publicly-funded services such as home carers or nursing homes and lead to additional costs for the NHS, according to the Local Government Association. With more than a third of the population likely to be over 50 by 2025, and the over-nineties forming the fastest-growing age group, debt problems among pensioners is likely to worsen, experts say.
Earlier this week, a leading charity warned that six out of 10 pensioners on low incomes were put off claiming benefits because the system was too complicated. Nearly half of elderly people said they found means-testing intrusive, while 48 per cent were put off claiming by confusing forms, said Age Concern.
A third of the 5.4million people entitled to Pension Credit were still missing out, with about £2.5bn left unclaimed each year, the charity added. It called for state benefits to be paid automatically to those who were entitled to them.
Gordon Lishman, the charity's director-general, said: "It's worrying to hear about older people who are mired in debt, as it can be particularly difficult for those who have retired to pull themselves back out again. Further and more extensive research is needed so we can establish the extent to which older people may be struggling.
"Many pensioners are put off claiming benefits because they find the system confusing. Yet this is money that is rightfully theirs and, if claimed, could make a big difference to their weekly income."
Despite the emergence of a credit-fuelled economy, many older people still attach a stigma to debt and to receiving state aid, said Joe Harris, the leader of the National Pensioners Convention. He added: "Many older people feel the whole process of having to parade their poverty in order to get a little bit extra to live on is demeaning."
According to debt counsellors, a "perfect storm" of benefit problems, cheap credit, rising fuel and food prices and the fall in income which follows retirement is forcing more elderly Britons into bankruptcy. The proportion of retired bankrupts has more than doubled since 2002 to 7 per cent of the total, or 7,900 people, a study by the accountants Wilkins Kennedy found. Kevin Stevens, an insolvency partner at the firm, said: "More pensioners are going bankrupt as they struggle to repay debts when their pension is their sole income."
Debt advice lines such as the Consumer Credit Counselling Service are also taking more calls from the over-60s, whose average debt is nearly £32,000.
Gill Hankey, director of the Bankruptcy Advisory Service, said: "This week, I had two men in their 80s apply for bankruptcy. It is very sad to reach that stage of life so saddled with debt."
For many senior citizens, such as Robert Cruickshank, seeking insolvency is an indignity. The 68-year-old went bankrupt owing nearly £29,000 after taking out a loan to pay for his partner's funeral two years ago.
The former soldier, from Newcastle, said: "It was costing me £400 a month, which I could not cover with my pension. I was buying out-of-date food because I couldn't afford anything else. I'm glad to have the debt cleared but it has been at great cost. I have not even told my family."Reuse content