Pensioners who fail to claim the benefits to which they are entitled risk joining the rising number of older people who are slipping into insolvency.


William and Kathleen May-Chappell found they were eligible for additional benefits (see case study)
The number of over-65s declared bankrupt has more than doubled in the past five years, according to accountants Wilkins Kennedy. Retired people now account for 7 per cent of all bankrupts, up from 3 per cent in 2002.

Experts blame the debt crisis facing pensioners on the facts that they are living longer but may have inadequate savings to cope with rising food and utility prices. They say the complex benefits system has also been a contributing factor, as it deters pensioners from claiming and leaves them out of pocket by more than £2bn.

Gordon Lishman, director general of Age Concern, said: "Many pensioners are put off claiming benefits because they find the system confusing. Yet this is money that is rightfully theirs."

Many pensioners have turned to credit cards or mortgages to raise the extra funds needed to supplement their retirement income. But recent increases in interest rates mean that these additional debts are catching up with them, and reaching unmanageable levels.

Keith Stevens, insolvency partner at Wilkins Kennedy, said: "Although attitudes towards bankruptcy have changed dramatically, the older generation still feel the stigma of bankruptcy and are often reluctant to ask for help until it is too late."

Anyone relying on the state pension alone at just £87.30 a week for a single person would be scraping by on a fifth of national average earnings at £23,250.

Even if this amount is topped up with means-tested pension credit, pensioners are still only entitled to £119.05 per week.

To qualify for the full basic state pension, you need to build up National Insurance contributions over 39 years for women and 44 years for men – although both these requirements will fall to 30 years after April 2010.

The retirement age for women is set to increase gradually from 60 to 65 between 2010 and 2020. The retirement age for both men and women is then set to rise to 68 by 2046.

Depending on their circumstances, pensioners are eligible for several types of benefit, including housing benefit, council tax benefit and pension credit.

Anyone who wants to enjoy a financially secure retirement should begin planning as early as possible.

Tom McPhail, head of pensions research at asset managers Hargreaves Lansdown, said: "One of the advantages of saving into a pension fund is that it diminishes the risk of bankruptcy in retirement."

If you lock your savings into a pension fund you are less likely to spend that money before you get to retirement. Also, most pension assets are protected from creditors in the event of bankruptcy.

A government spokesman said: "It is therefore very unlikely that a bankrupt who is retired will be asked to make any contribution from their income."



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