Insolvent pensioners
The rise in insolvency amongst pensioners is higher now than fifty years ago
Pensioners are caught between high inflation and low interest rates. At the same time, the over-65s are having to fund the younger generation, who cannot afford their own homes and who may be out of work
They are having to provide not only for their children, but in many cases, for their grandchildren as well
Low interest rates have decimated nest eggs in bank and building societies, which in years before, would have earned a decent percentage every year. Most people benefiting from the low interest rates are the young, not the old
Pensions have also been hit. A 65 year old man retiring today will get a third of the pension he would have received in 1992
Record numbers of over 65s are now in employment, many of whom simply can’t afford to stop working
For instance, your parent may have received a large redundancy payment and want to invest it for the future, or need help converting their pension fund into retirement income
The Money Advice Service can help you prepare for a visit to an Independent Financial Adviser (IFA), or you can contact the Society of Later Life Advisers
An IFA will recommend financial products after researching the whole market. Unless the IFA is being given commission from a firm for steering customers towards certain products, your parent will usually have to pay for their advice
They will carry out a ‘fact find’ to make sure they recommend the right products, and will ask about:
- Your elderly relative’s income, debts and savings, and what Income Tax rate they pay
- Their financial plans
- How they feel about risk – is it important that they do not lose any money they invest, or are they prepared to risk losing money if it gives a chance of a bigger return?
- The IFA will come back with a written recommendation of which products are suitable, and answer any questions. Your parent should not embarrassed to ask questions if they don’t understand something
- From December 2012, the rules for IFAs have changed. This will affect how they charge for advice and the qualifications they need. Contact the FSA for more information.
- The best way to find an IFA is by personal recommendation
- Check with the FSA that the IFA is authorised, or visit www.unbiased.co.uk to find a local IFA
National debtline Consumer credit counselling service Money advice service SOLLA
