The UK's gradual recovery from the post-2008 'great recession' has led to Brits feeling more confident than any other developed economy in recent months. However, despite this positive mood, recent statistics have revealed that British pensioners are more likely to go bust now than they were at the peak of the recession.
We consider what's causing this worrying trend and what it means for your business.
The recent research from accountancy firm Moore Stephens has found that whilst the overall number of people going bankrupt has fallen, pensioners have bucked this trend.
The firm reported that 5,672 pensioners went bankrupt in 2013, which was up from 4,727 at the height of the recession. Since 2009, there has been a 22% rise in over-65s going bust, whereas across the whole of Britain, over the same time period, there's been a 25% decline.
This means that over-65s now make up 6% of all personal insolvencies – a considerable increase when you consider that in 2009 they comprised just 3.6%.
Why Are UK Pensioners Struggling?
According to Moore Stephens, pensioners have been hit particularly hard by the recession. It has been suggested that low interest rates have reduced yields on bonds and gilts, which has pushed down annuity rates (the higher the annuity rate, the more pension you'll receive).
Whereas in 2009, £100,000 would buy you a pension income of £7000, the same amount now only secures an income of £5,700 a year. Increased life expectancy has also reduced annuity rates over the longer-term, meaning that individuals are now receiving a smaller annual income than they might have expected when they were saving.
When you combine these factors with the rising cost of living that includes, food, energy and healthcare, it becomes clear why so many older people are struggling to make ends meet.
David Elliott, a debt specialist at Moore Stephens, said, "An improving economy helps those in work, but it brings fewer benefits for those who have already retired.
"Pensioners are being hit by a combination of low annuity rates and low interest on bank accounts – and the result is that incomes will be much lower than a lot of them expected when planning their retirement.
"That makes it challenging to pay off debts from unsecured loans, credit cards and other high interest forms of debt taken out by those who have retired recently." (Telegraph)
Image by Frederic Mancosu
What Does it Mean for Your Business?
With an increased number of UK pensioners struggling to pay off debts, it's essential that you ensure that anyone entering into a financial agreement with your business is financially stable.
Here at Peopletracer, our financial search services can help to you to do just that, with our Bankruptcy Search enabling you to check for bankruptcies against a person. We also offer a variety of other financial searches including:
County Court Judgement Search – a judgement which is enforced by judicial courts if someone fails to pay their debts. A CCJ is recorded on the Register of Judgments, Orders and Fines in England and Wales for six years.
Individual Voluntary Arrangement Search – a form of insolvency which can be used by individuals wanting to avoid bankruptcy.
Debt Relief Order Search – an alternative to bankruptcy which works as a more immediate means of having debts written off.