Excluding the state pension and pension credit, from 2011 benefits, tax credits and public service pensions will rise in line with the Consumer Price Index, rather than the, generally higher, Retail Price Index.

The basic state pension will be linked to earnings from April 2011, with the pension guaranteed to rise in line with earnings, prices or 2.5%, whichever is the greater.

The government will also consult on phasing out the default retirement age – to ensure those who want to work past 65 are able to do so.

The highest ratio of debt to income peaked for those aged 66 owed in credit card balances and unsecured loans.

The government today confirmed it would be setting up an independently-designed compensation scheme for Equitable Life policyholders that was “swift, simple, transparent and fair”.

The basic State Pension is a pension paid to you by the government when you reach State Pension age. It is based on the number of qualifying years gained through National Insurance contributions you’ve paid, are treated as having paid or have been credited with throughout your working life.
Do you qualify for the basic State Pension?

Age Concern and Help the Aged found borrowers in their late 50s and early 60s owe on average at least four times as much in unsecured credit as their counterparts did a decade ago, and that a quarter of all people approaching state pension age have outstanding debts.

It is also increasingly likely that retirees are struggling to pay those debts. Last year, a record number of pensioners were plunged into insolvency, with the number rising faster than for any other age group – up 44% to 6,952.

Retirement Debts is seeing a growing level of enquiries relating to Equity Release, which is hardly surprising in view of the very low returns being seen from interest rates on savings which are relied upon by many retired people who have put money aside for years expecting to live on the income from those savings.