This is what one of my clients said to me when he first came to seek advice for his rent arrears. It was in September 2016. He was 56 years old but would not be eligible for the state pension for another decade. What struck me about him was his proposal to unlock his pension funds to pay for his rent arrears. It made me think about men in his age group, how they lived and how severe their financial and other problems can be and the challenges they face trying to rectify it. These are problems that, as things stand, will persist until their retirement age.
As I dug deeper into this gentleman’s personal circumstances, I discovered how he had fallen into poverty. His life was thrown into chaos once he was faced with early retirement. He previously worked for a local council and his role was made redundant. He was presented with two options: retire or take compulsory redundancy from his job. This was a role had held for over 25 years. He opted to take early retirement. He struggled to adjust to his new circumstances. His marriage came under strain due to money troubles, his depression and anxiety. His wife initially tried to help and support him, but she found it hard to cope with his mental health problems. As a result, she asked him to leave their council home. His 20 year marriage ended a year after he retired.
He lived rough for a few days and then found private accommodation in Summer 2016. He paid £750 per month for a room. He shared the flat with two other housemates whom he rarely saw and had some savings from which he paid his rent. However, he used up his savings and could no longer afford the rent.
When he moved into the room, he did not know whether he could claim housing benefit for it. If he had applied for housing benefit before 1st April 2016, he could have backdated it for the three and a half for months he was in arrears. The actual rule, in force at the time, allowed him to claim up to 6 months of his initial claim date if there was a good reason for it. From 1st April 2016 any claim made were only allowed to be backdated for only one month regardless of the reason. This was the new policy introduced by the current Conservative Government.
The Coalition government (2010 - 2015) introduced another policy. From 1st April 2015 any person, who is 55 years old or above, could gain access to all their pension funds. The purpose of this policy was to put the pension holder in control of their pension funds and withdraw all their savings if they choose. Given this man’s circumstances, I doubt whether he was choosing to get his pension fund released to better himself. A more accurate reason would be that he was withdrawing his pension funds to avoid destitution.
Initially I had no idea of such a rule when I advised him because I recommended to him that he see a financial adviser. If he has, subsequently, fallen into the wrong hands, it could be that he may have lost more than his accommodation. There has been a dramatic rise in fraud related to unlocking pensions. A large number of people have been duped into releasing their pension early only to then lose all of their life savings. Fraud Action, which investigates online fraud, reported that between April 2014 and May 2017 fraudsters stole nearly £44 million by giving false advice and transferring the money to a broker. The promised returns did not materialize leaving the victim penniless. Although I have had no further contact with the man beyond our first debt advice meeting, I hope he does not become one of the victims who have been conned in this way.
There appears to have been little assistance given to him to aid his recovery from the trauma of separating from his wife, being made redundant from his work and the anxiety of being evicted from his home. At face value he did not appear to be in a mental health crisis. If I were in his situation, I would have needed professional support from a mental health practitioner to recover. According to Age UK, half of adults aged 55 and above have experienced mental health problems. In terms of understanding the data in another way, it is about 7.7 million people. Age UK’s research also shows that 35% did not know where to go for help and support if faced with such a crisis in their lives.
Could there be any other support he may need if his landlord successfully evicts him from the property and he becomes homeless again? It is going to be difficult for him to qualify for the local council’s priority list for social housing based on his existing circumstances. According to Shelter the waiting list for social housing in the UK has reached a record high of more than a million. It is hard to believe that local authorities would prioritise him. Households with children and severely disabled members are often given priority for emergency accommodation. The local council may also argue that he made himself intentionally homeless by not paying his rent in time and getting into rent arrears from his landlord. I believe that he is in debt because of the current government’s rule change on housing benefit claims.
In terms of him getting him ready to re-enter the labour market, I am not sure whether this is possible until he has a stable home environment. There are over a million people in the UK, in their 50s, who are willing to work but cannot work due to age discrimination. This has been emphasised by the Women & Equalities Committee who found that the labour market prefers younger workers. Even for this man to start thinking about employment he would require professional advice, help with his CV, assistance in cover letter writing and preparation for job interviews. He may also require appropriate clothing to wear for an interview. The process of returning this man to the labour market appears to be very complex indeed.
This tragic story has illustrated how those who seek debt advice often do not just have problems concerning money. They bring many other societal issues that are beyond my control as a Debt Adviser. This gentleman initially asked me if his landlord would stop eviction proceedings if he released his pension funds. In truth this man requires more than advice on debt if he is to stabilise his circumstances and live a decent life.