Pension debt creeping up

According to Alliance Trust, the over-75s are the worst hit by inflation at four per cent, near-double the official bank rate, increasing the risk of debt problems.

Shona Dobbie, head of the Alliance Trust Research Centre, said: “Our study shows that the UK’s elderly are still suffering.

“Some under-30s may have been affected by an increase in education fees, but they are now benefiting from a sharp drop in prices of audiovisual and computing goods. In contrast, price pressures on the over-75s have not eased.”

Ms Dobbie said that utility bill increases and rising costs for basics were the worst culprits for hitting pensioners’ wallets, meaning that many could benefit from a debt management plan for their finances.

Her comments come as the Queen’s speech revealed plans to shake-up the pensions system.

However, while many may welcome the restoration of the like between earnings and pensions, this will not occur until 2012 so debt management action needs to be taken now.