October, 2009

Financial help for pensioners in debt could become a reality if the State Pension Age increases to 66 from the current 65 according to the Shadow Chancellor – George Osborne during the Conservative Party Conference in Manchester last week. In fact this is one of the proposed policies the Conservatives intend following a successful general election next year.

It is widely accepted that the state pension age needs to rise due to the increase in life expectancy. This view is backed by Pensions Policy Institute Director – Niki Cleal in this statement to press.

“When the current state pension was introduced in 1948 a 65-year-old man could expect to draw his state pension to age 77, by 2008 a 65-year-old man could expect to draw it until age 86 – this increase in life expectancy increases the cost to the exchequer of providing the state pension.”

Debt levels will also be helped by people working for another year to clear a larger proportion of those debts prior to retirement. Some studies show that up to 22% of the 50 years old plus category have taken out credit during the last year.

One solution that many pensioners are looking into at the moment is Equity Release. Many pensioners in debt use these schemes to pay off what they owe. This is rapidly becoming a more popular solution for pensioners. If you think it may be an option for you, please get in touch using the form on the right.

Equity release is becoming much more popular in recent months, up by as much as 13% overall in the last six months.

Ivan Cooper, Chairman at debt advice specialists Chiltern, said: “As long as equity release is done through a reputable company, it can be a safe way to free up money and get out of debt; which could improve your lifestyle.”

The cost of living in the UK is higher than across Europe but quality of life is amongst the lowest, which is why so many people are experiencing debt management problems, according to research by uSwitch.com.

The study found that whilst the average household income is the highest in Europe, the cost of food, fuel and other daily costs makes living in the UK one of the most expensive.

But not only do we work the longest and have the least holidays, those working in the UK are also expected to find that quality of life in the UK could suffer even more in the near future – as politicians start to plot a way out of the economic crisis and slash public sector budgets.

Ann Robinson, Director of Consumer Policy at uSwitch.com, said: \”We earn substantially more than our European neighbours, but this level of income is needed just to keep a roof over our heads, food on the table and our homes warm. It's giving us a decent standard of living, but it's not helping us achieve the quality of life that people in other countries enjoy.

\”For too long the focus in the UK has been on standard of living rather than quality of life. As a result we have lost all sense of balance between wealth and well-being.”

Ivan Cooper, Chairman at leading debt advice organisation Chiltern, added to this and said: “The fact that many people have had to resort to using credit, such as personal loans, overdrafts and credit card debts, just to cope with huge living costs highlights how expensive the UK is.

“Which is why those living in the UK should seek impartial debt advice, from a reputable debt help organisation, as soon as they think they may have difficulty to maintain their current credit commitments.”

17 factors were monitored in the study, including net household incomes, taxes and the cost of essential goods, like fuel, food and energy bills. These were compared across ten European countries, to understand the cost and quality of living across Europe.

The Bank of England have decided to keep interest rates on hold at their record low of 0.5% for the eighth straight month, in a bid to ease the economy and curb the nation’s debt problems.

The Bank also said that they would continue with the Quantitative Easing programme, where they will pump an extra £175bn in to the economy.

As figures showed the recovery from the recession remains very patchy and the job market is still slow, many leading debt advice organisations agreed that the move to hold interest rates remained the best option for people struggling to get out of debt.

Ivan Cooper, Chairman at debt management specialists Chiltern, said: “With interest rates maintained at a record low, mortgages and other credit lines are kept at an affordable rate.

“It’s always worth seeking impartial debt advice as soon as you realise that you may not be able to afford to maintain your credit commitments.”

Aer Lingus and British Airways have reported that they will be cutting jobs and freezing pay to ease debt problems, as the International Air Transport Association predicts record losses.

The Irish airline have announced they will be cutting around 700 jobs and freezing pay for people earning over £32,000, to try and bring the company back into profit.

British Airways have also said that up to 1,700 jobs could be lost and that they will be changing working practices in a bid to prevent debt management issues developing.

Christoph Mueller, the chief executive of Aer Lingus, said the outlook for the airline remained ‘poor’ and he did not see any quick recovery.

He added: \”Aer Lingus cannot continue with an operating cost base which is structurally uncompetitive when compared to that of its closest peers."

Ivan Cooper, Chairman at debt management specialists Chiltern, said: “The fallout from these job losses is quite significant, and many families will be affected especially in the run up to Christmas when finances are already tight.

“With jobs scarcer to come by, many people may not find a new job quickly, so they will need to seek impartial debt advice to ensure that they can maintain repayments on current credit commitments.”

Worries have grown over the extent of The Duchess of York’s debt problems, after her lifestyle and promotions company folded owing over a million dollars.

Sarah Ferguson’s Hartmoor company was launched in 2006 in New York’s swanky Madison Avenue, but has folded after only a couple of years trading with substantial debts.

A spokesman for the Duchess said: “She has faced some challenging and difficult times with one side of her business, Hartmoor, but she is very resilient, will work through the situation and bounce back from this.”

A few weeks ago, the ex-Princess was taken to court over a number of other unsettled bills in the UK and had to deny any talk of financial difficulties.

Recently she has also lost out on high paid contracts, after her £2 million pounds a year contract with Weight Watchers came to an end and she lost work with Wedgewood.

Ivan Cooper, Chairman at debt advice specialists Chiltern, said: “Sarah Ferguson isn’t the first member of the royal family to suffer with debt management issues. Throughout history kings and knights of the realm have been made bankrupt after suffering with debt problems.

“Ms Ferguson could avoid bankruptcy by seeking impartial advice from a reputable company, sooner rather than later, if it does turn out that she may have difficulty maintaining her current credit commitments.”