Bankruptcy among pensioners doubles in five years

LONDON, Oct 1 (Reuters) Twice as many pensioners are going bankrupt than they were five years ago, according to new figures.

They made up 7 per cent of bankruptcies in the past year, up from just 3 per cent in 2002, according to chartered accountant Wilkins Kennedy.

It said the trend was set to continue as increased life expectancy put greater strain on pensioners' savings and inflation-beating rises in the price of food and fuel bills exacerbated the situation.

Keith Stevens, an insolvency partner at Wilkins Kennedy, said: ''More and more pensioners are going bankrupt as they struggle to repay debts when their pension is their sole source of income.

''Although attitudes towards bankruptcy have changed dramatically since the days of debtors' prisons, the older generation still feel the stigma of bankruptcy and are reluctant to ask for help until it's too late.'' The research, based on an analysis of 1,250 bankrupts across England and Wales per year, also pointed to a higher concentration of bankrupt pensioners in rural areas.

Stevens said higher transport costs and fewer work opportunities for those living in the countryside might account for the finding.

A total 113,500 people were declared insolvent during the year to the end-June, up from just 30,600 people who became bankrupt or took out an individual voluntary arrangement (IVA) in 2002, according to data from The Insolvency Service.

IVAs -- a less formal way of dealing with debt problems -- are agreements with creditors to make reduced payments towards debts.

After five years, the debt is classed as settled.

Wilkins Kennedy said if a similar proportion of pensioners took out an IVA as went bankrupt in the past year, the number of retired people going insolvent would have soared nearly nine-fold to almost 8,000 from around 900 five years ago.

The inflation rate facing the elderly has been running at above the headline rate throughout Alliance Trust's four-year ''age and inflation'' study.

It stood at 2.1 per cent in August, 17 per cent higher than the official headline rate of 1.8 per cent, according to its latest figures.

Although the elderly are benefiting from falling gas and electricity price inflation -- now at the lowest levels since December 2001 -- Alliance Trust has warned that pensioners, who tend to spend a large proportion of their monthly budget on food, could still face pressures from rising food prices.

Food price inflation rose to 2.8 percent in August from 2.5 per cent a month earlier.

Stevens added: ''Pensioners are often forced to spend a great proportion of their income on necessities and have felt the impact of rising petrol prices through higher energy bills, and escalating food prices far more severely than the rest of the population.

''Those who do not have index-linked pensions may find that they are unable to maintain their standard of living, but pensioners who are unable to scale back their spending on retirement may find that they run into financial difficulties very quickly.'' REUTERS SKB BD1815