Bereavement benefits: Couples face £82m 'living together penalty'

clock • 2 min read

Out-of-date benefit rules which omit cohabiting couples from certain Bereavement Benefits are costing £82 million per year in lost benefits, according to a major report by Royal London.

Currently Bereavement Benefits such as Widows Allowance are just restricted to couples that are married - even if they have lived together for several years and have children. 

The Work and Pensions Select Committee is running an inquiry into Bereavement Benefits and Funeral Poverty which took place today with contributions from Royal London's Simon Cox.

Under current rules for National Insurance benefits, where one member of a couple dies, the surviving partner may be entitled to a range of financial support.

This includes a £2,000 lump sum and ongoing National Insurance bereavement benefits which can be worth more than £10,000. 

Using Office for National Statistics data for death rates and cohabitation rates, Royal London estimates that these rules have cost working-age cohabiting couples £82 million in lost benefits in the last year.

As the number of people cohabiting continues to rise, and as the average age of cohabiting couples increases, these losses are set to grow, the insurer warned.

The report highlighted that while the National Insurance system ignores cohabitation, other parts of the benefit system do take account of cohabitation, but only in order to reduce entitlements.

Steve Webb, director at Royal London said: "Many unmarried couples have been living together for many years and are financially dependent on each other. Yet at a time of bereavement the benefit system treats them as though their partnership never happened.

This is despite paying the same National Insurance Contributions into the system as everyone else. When it suits the government to treat two individuals as a couple it does so, but when it comes to paying money out the government is happy to deny the existence of a relationship. It is hard to see how this double standard can be justified.

"A benefits system that was designed in the 1940s needs to be brought up to date. With over six million people in Britain living together as couples, a large and growing number of people risk being left without support in the event of bereavement unless the system is changed."

Adviser impact 

Webb added: "People believe the State will provide for them, but sadly that isn't always the case. Bereavement benefit is something most people don't realise they are not entitled too until it is too late.

"It's important that advisers make clients who live together aware of this. It's another reason to have the conversation to make sure their loved ones are protected."

Further reading 

Ministers launch inquiry into Bereavement Benefits

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