Insolvencies rise among elderly despite national decline

The number of elderly people in the UK facing insurmountable debts has risen since the height of the financial crisis, countering an overall trend of declining insolvencies.

While the total number of people unable to repay their debts across the UK fell by a quarter from 2009 to 2013, insolvencies among the over-65s increased by 22 per cent in the same period.

According to analysis of Insolvency Service data by the accountancy firm Moore Stephens, elderly people's share of all insolvencies rose from 3.6 per cent in 2009 to 5.8 per cent in 2013.

"Recent retirees and their savings have struggled more than most to exit the recession," said David Elliot, a partner at Moore Stephens. "An improving economy helps those in work, but it brings fewer benefits for those who have already retired and are locked into low annuity payments."

Mr Elliot says that, as well as a fall in annuity rates, pensioners are receiving lower income from their bank savings and bonds, which offer low rates of interest.

Longer life expectancies are also a factor because inheritance often does not occur until children themselves have retired. "If accessing the value of their parents' homes is a vital part of repaying their debts, this can create the kind of problems that lead to insolvency," Mr Elliot said.

Jane Vass, head of public policy at Age UK, says that, while the overall problem of debt among older people remains quite low, research by the charity has found that the amounts owed by those in trouble have risen sharply.

She adds that the costs borne by elderly groups can be disproportionately high. Older people in retirement spend a much higher share of their income on essentials such as food and energy, the costs of which have recently risen faster than inflation.

"For elderly people living in rural properties off the [energy] grid, it is very difficult to control fuel costs," says Ms Vass.

Research published last November by the Money Advice Service, a body set up by the government to offer people free financial advice, identified a segment of the population that it called "uncomfortable retirees". They have an annual household income of less than £15,000.

Almost three quarters (73 per cent) of this group reported that they find keeping up with bills "a heavy burden". Almost half (46 per cent) reported falling behind with credit commitments in the previous three months.

Separate research published this week by Experian, the credit agency, identified six coastal resorts - traditionally favoured as retirement destinations - among the 10 UK towns with the highest rate of personal insolvency between April and June.

Torquay, the largest town on the genteel "English Riviera", recorded the highest rate in the period. It had 21 insolvencies per 10,000 households, more than double the national average of ten.

Joining the likes of Skegness and the Welsh resort of Rhyl among the top ten were the northern towns of Accrington, Barnsley and Washington.

Four of the five areas that enjoyed the lowest insolvency rates - of two per 10,000 households - are in London. Joining Chelsea, Hammersmith, Putney and Richmond in this group was Northern Ireland, one of the UK regions where living standards have fallen most since the recession.

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