Past Articles for the Personal Debt Category

Many UK workers are risking financial problems and debt later on in life by failing to sign up for company pension schemes, new research has revealed.

Findings from Prudential suggest that although 66 per cent of UK employees were aware of pension packages offered by their employer, 18 per cent failed to sign up.

This 18 per cent is resulting in over £5 billion in pension perks being lost every year, with staff earning the average wage of approximately £19,500 per annum losing out on an extra £2,208, possibly increasing their chances of needing debt help as they get older.

And the results are less favourable among young people, with 37 per cent in the 18-24 age group being unaware of their employers’ pension plan.

Those who already hold a pension have been advised to think carefully before making a decision to reduce their contributions by Adrian Lowocks of Bestinvest.

By Tom Musk

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The risk of debt and repossession brought on by the potential recession could cause an “epidemic of mental distress”, according to the Liberal Democrats.

Party leader Nick Clegg noted at a conference at the University of Sheffield that the financial crisis may have an impact on people’s mental health and put forward a list of proposals to help limit the potential problem.

He called for the introduction of debt counsellors to help people with mental health problems organise a debt management plan, while also stating procedures should be put in place enabling individuals to freeze their credit rating so they would not be able to take out any new loans or credit cards.

“It is the hidden tragedy of a recession that mental illness will surge as people’s jobs and homes are increasingly under threat,” Mr Clegg noted.

Recent data from the Financial Services Authority revealed home repossessions increased by 71 per cent during the second half of 2008.

By Tom Musk

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Those struggling during the current credit crunch have been advised to implement a budget plan by one finance charity.

The Consumer Credit Counselling Service (CCCS) - which provides information to those in financial difficulty - has urged people to take this option, rather than selling items to reduce their debt or increase disposable income.

“By cutting out luxuries … your margin of surplus should increase and allow you to meet your priority obligations such as rent, mortgage payments, utility bills and food,” spokesperson for the CCCS Tom Howard explained.

Mr Howard went on to say that those concerned about their financial situation may wish to organise a meeting with a debt adviser to help create a money management plan.

Such advice may be useful for those struggling with credit card debt, or facing bankruptcy.

Recent research carried out for MoneyExpert.com revealed 56 per cent of Great Britain’s population applied for financial products over the last six months, 13 per cent of which were rejected.

By Tom Musk

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Increasing numbers of consumers are seeking independent financial advice (IFA) during the current economic downturn, research has revealed.

Data from Unbiased.co.uk has shown over 125,000 people sought advice on various financial topics over the last three months, with 29 per cent requesting help regarding planning for retirement and 23 per cent seeking assistance over their investments and savings.

Personal protection, which may include advice on becoming debt free, was seen as the biggest growth area, with 18 per cent more people seeking advice on this issue when compared to figures from the fourth quarter of 2007.

Chief executive of Unbiased.co.uk David Elms explained that customers are becoming increasingly worried during the credit crunch.

“As fears of recession loom, consumers need expert advice more than ever, and whole of market IFAs are the best-positioned to serve these needs,” he explained.

Debt among young people is a contributing factor towards society as a whole not contributing enough to savings, insurance expert Al Elliot has claimed.

By Tom Musk

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Applying for loans to ease debt issues during the current financial crisis is a “risky strategy” according to the Consumer Credit Counselling Service (CCCS).

Tom Howard, spokesperson for the body, stated that loans should not be relied upon as there is no guarantee lenders will accept applications and people looking for a debt management strategy should only consider a loan if they are certain they can keep up with repayments.

However, Mr Howard also remarked that many people are responding to the credit crunch in the right way so as to avoid getting into debt.

“[They are] being thrifty, recognising overspending and cutting back on any past excesses and unnecessary luxuries,” he noted, adding that the CCCS advises consumers to “live within your means whenever possible”.

Recent research carried out by YouGov on behalf of MoneyExpert.com revealed lenders have rejected almost five million applications for new credit cards or personal loans over the past six months.

By Tom Musk

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It is important to seek advice before making a decision regarding reducing contributions to pension plans in order to improve debt management during the current financial crisis, one independent advisory firm has warned.

Senior investments advisor at Bestinvest Adrian Lowocks has urged those considering making such a move to talk to their bank or a financial advisor in order to establish the best money management tactics.

“If you are doing it [making cutbacks] because you have got more immediate and budgeting or financial concerns then it is very important to speak to the bank about that,” he explained.

Mr Lowocks went on to state that doing so would provide “good ideas”, allowing those worrying about their finances to “take control of your situation”.

According to recent research by uSwitch.com, 86 per cent of the 42 per cent of Britons who have stopped insurance or pension contributions save up to £50 a month.

By Tom Musk

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Women need to make plans to ensure they will be financially sound in the future, one financial services group has suggested.

According to research by Friends Provident, 30 per cent of British females aged between 25 and 45 do not have in place a plan for their future, meaning they could experience problems such as bankruptcy or property repossession later in life.

And the findings also revealed 69 per cent do not have a personal pension in place, while more than half admit they save £500 or less every year.

The findings come following the news that more women may qualify for a full state pension from 2010 and while that was described by Friends Provident’s Christine O’Grady as “great news”, she warned such a move may not cover the cost of retirement.

“As people live for longer, it is critical they prioritise retirement planning to ensure they have a stable financial future,” she explained.

Money website Fool.co.uk has urged Britons to prepare for the impending recession, stating that many are not conducting their debt management efficiently enough.

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People are being encouraged to carry out a check on their credit record that costs just £6 and could help them to be approved for a loan.

Consumer watchdog Which? has urged borrowers to carry out the check after its research showed that mistakes are commonly made on such records.

The survey found that 16 per cent of those who checked their credit rating found inaccuracies on their files, including evidence of identity theft and wrong personal information.

Errors such as this could lead people to be rejected by lenders, the organisation warned.

Senior researcher Martyn Saville commented: “You can’t afford not to check your credit files - it’s £6 well spent when you consider how costly and inconvenient a mistake on your files could be.”

Meanwhile, recent research conducted by GE Money Home Lending discovered that one in eight people had applied four or more times before finally being approved for a loan or mortgage.

By Jamie Price

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A new initiative has been launched in order to help financially untouchable people (funts) gain access to vital services.

Minister for the Department for Work and Pensions (DWP), Kitty Ussher, is spearheading the £12 million Champions campaign.

It will aim to ensure funts - a term that was created by ClearDebt to describe people who have trouble being approved for loans - can access basic financial services such as bank accounts, home contents insurance, affordable credit and debt advice.

The DWP is collaborating with key partners such as local authorities and social landlords to develop the programme.

Kitty Ussher commented: “It is vital that we work with organisations who come into daily contact with some of the people we want to reach.”

Such people are “well placed” to provide the sort of advice and support to those that need to improve their financial situation, she added.

Meanwhile, recent research by Unbiased.co.uk found that this year, debt levels rose by approximately £800 million compared to the second quarter of 2007.

By Jamie Price

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Many Brits are bracing themselves for a recession, a new survey has suggested.

The research, conducted by Close Investments, has found that 52 per cent of people are worried that a recession is on its way, while 53 per cent stated that they are concerned about the credit crunch.

Londoners and those in the south-east were revealed to be the most worried about a possible recession.

Interestingly, the housing market came seventh in the list of concerns, which was unusual for a nation who prides itself on its homes, the organisation noted.

“Clearly people are worried about what the future holds for themselves and their families. No one likes to plan for the worst, but it is sensible to do so,” remarked spokesperson Hannah Parkinson.

Meanwhile, government action on rescuing banks and providing liquidity may have come too late to save us from a serious economic slowdown, according to Ben Read, from the Centre for Economics and Business Research.

By Jamie Price

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