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Pensioners rack up debts as retirement income falls

More pensioners are being burdened with debt as pension incomes fail to meet living expenses.


by Michelle McGagh on May 24, 2012 at 10:51

Pensioners rack up debts as retirement income falls

An increasing number of people in retirement are being pushed into debt as a third of retirees said their pension income was not enough to secure a stable financial future.

A survey by Age UK shows a rise in the number of debt-burdened older people, and 19% of those in debt are concerned about the amount they owe.

One in five retirees owes money on a mortgage, credit card or loan, and younger retirees were more likely to be in debt.

A total of 11% of those polled said they had to borrow to pay their mortgage or rent, and a third of people did not feel their pension income and savings were enough to ensure a financially stable future.

Pensioners have been hit particularly hard by low interest rates on savings and poor annuity rates when they reach retirement.

Age UK urged pensioners to claim all the money they are entitled to from the state to ease the burden of bills. It has launched a campaign, More Money in Your Pocket, to encourage people to claim benefits.

The survey showed that 72% of people who claimed benefits said the extra money had made a difference to their lives.

There are 1.8 million pensioners who live in poverty, but £5.5 billion of benefits goes unclaimed each year and up to 1.6 million older people are failing to claim pension credit.

Michelle Mitchell, Age UK director general, said too many older people live in poverty, and urged the government to work on ways to get money to those who need it.

‘It is extremely worrying that such a high number of older people report having debts and have had to borrow money just to keep a roof over their heads. Most older people live on relatively small incomes, so making a debt repayment can be a worry.’

She added that pensioners are also hesitant to claim benefits as they don’t think they are eligible or find the process too complicated.

9 comments so far. Why not have your say?


May 24, 2012 at 13:01

Here is the argument for a higher personal allowance and a reasonable state pension. Why burden the elderly and the taxpayer with more forms to fill in, data to be lost, administrators to be paid? That doesn't even take into account that some pensioners consider claiming to be shameful, even if it isn't.

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May 24, 2012 at 15:22

... and now the IMF is suggesting that Britain should reduce its interest rates!!

What? Is 0.5% too high? Has zero% worked in Japan for the past umpteen years?

How the heck can pensioners keep their heads above water when their life time savings are earning nothing, but are being used to prop up banks and profligate borrowers as well as subsidising liar load mortgagees?

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gilbert long

May 24, 2012 at 17:12

If you have retired abroad, the income postion has been exacerbated over the last 4 years by the weakness of sterling accounting for a 50% drop in income. It is good to see sterling strengthen to 1.25 euros but what will happen when the euro inevitably will collapse ?

In real terms, with price inflation, we are having difficulty in enjoying our dream years but at least in France we live in a relatively civilised society where older people are respected and surveillance cameras are not a necessity !

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Jane Davies

May 24, 2012 at 17:36

It's a shame AgeUK ignores the plight of the poorest UK state pensioners. Those are expat pensioners who are denied the annual increase just because of where they live. They cannot claim any add on benefits and they accept that but to have their state pension frozen never to increase is a disgraceful discrimination inflicted upon them because they live in a "wrong" country. A state pensioner in Canada has their pension frozen yet a state pensioner in the USA gets the annual increases. So some countries are frozen and some are not.

This illogical discrimination is bordering on criminal...ALL have paid into the NI scheme thoughout their working lives so ALL are entitled to uprating but this, and past governments, withold state pensioners money just because of this unfair policy. Where one lives in retirement is nothing to do with the government as long as one has paid into the NI fund one is entitled to a state pension with uprating. So the poorest of UK citizens cannot get any help from AgeUK as this discrimination goes on year after year and they live in poverty. Some are getting less than £20 a week when they should be getting more than £100 a week. Organizations like AgeUK should be shaming the government over this disgusting treatment of vulnerable seniors but instead they do nothing.

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Bill lawson

May 24, 2012 at 19:37

The percentage reduction allowed to be taken out of my drawdown pension was a very bad decision made by George Osbourne for both me and the country, I had spent money on the strength of taking the maximum only to find weeks later i only received 2 thirds( not happy ), my future is gaurateed short so had no worries about a long term income , and the country missed out on a lump of tax which would have been deducted ,perhaps George would like to pay my interest charges ,I think not , Perhaps he is hoping to get what is left , well I am looking at leaving it to charity if possible I am about to start swearing so must stop.

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Jane Davies

May 24, 2012 at 19:52

If Gilbert Long is having difficulty enjoying his dream years then please spare a thought about those of us who on retiring to a "wrong" country find when, as I did two years after joining family in Canada, that our paid for state pension is frozen. Yes, frozen never to increase. Although all state pensioners have paid into the NI scheme over a lifetime not all are treated the same. Frozen in Canada but not in USA, frozen in Thailand but not in Philippines, frozen in Australia but not in Israel the illogical list goes on. ALL have paid into the NI fund ALL should be treated the same. This discrimination goes on and AgeUK does nothing to help those seniors who instead of getting £100+ a week are being cheated out of their rightful uprating, some are getting less than £15 a week. Steve Webb when in opposition declared he would end this injustice if he was voted in and yet has turned his back and never mentions this issue in any of his speeches on pensions, as far as he is concerned we don't count. It's about time organizations like AgeUK shamed the government on this and demand justice but sadly they ignore this disgraceful treatement of the most vulnerable of British citizens.

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May 24, 2012 at 21:06

If your future is guaranteed short, there is a good IFA in London who specialises in helping people who have received bad news on their health, particularly cancer.

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Jane Davies

May 25, 2012 at 00:37

If Gilbert Long is having difficulty enjoying his dream years then spare a thought for those who have joined family abroad for their retirement only to find they are in a "wrong" country. I joined family in Canada after working and paying NI all my life only to find two years after coming here and applying for my state pension that it would be frozen, never to increase. If I lived in the USA I would enjoy my rightful annual increases. This illogical policy is unjustified discrimination because it does not affect all expats. Thailand is frozen the Philippines are not, Australia is frozen Israel is not, Falkland Islands are frozen Turkey is not the list goes on. ALL of those in receipt of a state pension have paid in to the NI scheme ALL are entitled to annual uprating, this is theft and Age UK who know about this, because I have told them, are doing nothing to force this government to stop this injustice. Some expats get a pension of less than £15 a week when by rights they should be getting more than £100 a week.

It's about time organizations like AgeUK stepped up and supported these UK citizens who are reduced to living in poverty, where one lives in retirement is irrelevant and Steve Webb said he would end this injustice if he was voted into power and he has done nothing, these ministers should feel ashamed of themselves for turning their backs on these vulnerable seniors having promised to help them. Discrimination is illegal is it not?

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May 25, 2012 at 02:39

The report is disturbing but there is a consolation in knowing that there is £5.5 billion to be claimed; it is a question of education and direction. There is however a group of UK citizens who, to the eternal shame of this and previous governments are discriminated against even in claiming their basic pension, let alone any of the additional benefits the report from Age UK covers.

These pensioners live in the so called "frozen countries". Having contributed to the National Insurance Scheme all their working lives under the same terms and conditions as everyone else they are denied the right to withdraw from the NI Fund under the same terms and conditions as everybody else; they get no annual uprating each April. Their State Retirement Pension is frozen at the rate paid when they reach retirement age or set foot in the host country. If they live in the UK, the EU or some select countries like, for example, the USA, Israel or the Phillipines the annual uprate is applied. If, however, they live in such outlandish places like Australia, Canada or Thailand it is not. Blatant discrimination.

Annie has just celebrated her 100th birthday. As a widow in the early 1970s she emigrated to live with her only relative, her daughter, in Australia. Her full pension when she left the UK was just £6.12 a week. Disgracefully the pension she collected last week was....£6.12. There are half a million potential Annie's - or just 4% of the entire UK retired UK citizenship world wide - who each year suffer a reduced quality of life and living standard and which will continue to decline with each passing year.

The government says it cannot afford it...poppycock! The ring fenced NI Fund has a surplus of over £38 billion ....and as this reports says there is £5.5 billion unclaimed each year surely it does not need an economist to manage the budgetting to find £655 million to provide fairness, justice and equality for these fellow Britons?


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