‘Streamlining’ of bereavement payments will hit families hardest
Few things are more devastating for a young child than losing a parent, and the ability of the surviving parent to keep going is crucial. So the last thing they should be doing is worrying about money.
Yet grieving spouses could be more than £12,000 worse off when the government rips up the “widowed parent’s allowance”, which supports them until their children have grown up, and replaces it with the new “bereavement support payment”, which will last for just 18 months.
Campaign groups are furious about the little-known changes, which will save about £40m a year. Ministers insist it is a sensible modernisation of the system.
Critics also say the move is particularly unfair because the allowance, as it stands, is calculated according to the national insurance contributions of the deceased partner. In effect, it is the state pension they will never claim.
Under the current system, widowed parents who were married or in a civil partnership can claim a taxable allowance of up to £487.71 a month (£5,852 a year) until their youngest child is of an age where child benefit is no longer payable — this could be for up to 20 years if the child was a newborn when their parent died. The payments also stop if the surviving parent moves in with a new partner or they reach state pension age.
Widowed spouses or civil partners also receive a tax-free “bereavement payment” of £2,000, while those over 45 can claim a “bereavement allowance” for a year.
From April, however, all three benefits will be replaced by the bereavement support payment. Parents will get a lump sum of £3,500 then tax-free payments of £350 a month for up to 18 months. Under the government’s initial proposals, the money was only going to be paid for 12 months but it was extended after a consultation.
Alison Penny from the Childhood Bereavement Network said: “Latest government figures show 75% of bereaved families will be worse off in cash terms under the scheme, with the average working widowed parent losing out on over £12,000. That’s a huge difference to families struggling to cope after a parent dies.”
She added: “We know that children’s grief often takes a while to emerge, and they often face new challenges two or three years down the line. During this period, it’s vital that their mum or dad — who is coping with their own grief too — has the flexibility to be available to their children.”
The allowance will also no longer rise in line with inflation, meaning its value will gradually diminish as the cost of living rises. And it will not be paid to those who are cohabiting, even though about one in five couples with children are not married, according to the Office for National Statistics.
Georgia Elms, chairwoman of the charity Way (Widowed and Young), was 36 when her husband, Jon, died of meningitis in 2006. She found out the next day that she was pregnant with their second child.
She said: “We are incredibly disappointed that the government has failed to recognise that bereavement payments should also be extended to widowed parents who weren’t married or in a civil partnership when their partner died.”
This stance may yet come under further pressure following the successful appeal last week to the UK’s Supreme Court by a woman whose partner died leaving her with no rights to his public sector pension from Translink, the Northern Ireland public transport service. Denise Brewster and Lenny McMullen had lived together for 10 years and owned a home together. He died suddenly in 2009 at the age of 43, a few days after they got engaged. The court found Brewster had been unlawfully discriminated against.
Critics of the new bereavement support payment regime say it will also disproportionately affect women, many of whom will be under pressure to work at a time when their grieving children desperately need them at home.
Johnny Timpson, protection specialist at Scottish Widows, said: “Working-age women are statistically more likely to claim the bereavement allowance. In fact, 70% of claimants in 2014 were female. And with many parents not having financial protection in place, it means many families would face a significant financial struggle in the event of an unexpected loss of income due to serious illness or death.”
Bereavement is one of the main causes of financial difficulty, according to research carried out by the investment group Royal London. In a survey of 500 people who had lost a partner, nearly seven in 10 were not prepared financially or practically. While a quarter of couples had discussed the prospect of their partner dying, few had taken any practical steps afterwards.
The former pensions minister Sir Steve Webb, who is now director of policy at Royal London, said: “On average, women are losing a bigger proportion of their household income than men who are bereaved — and some in our survey were so stressed financially they had to downsize or move house, which is probably the last thing most people want to do out of necessity a short time after a bereavement.”
The Department for Work and Pensions insisted the widowed parent’s allowance was “outdated and complex” and the new system “simple, uniform and easy to understand”.
It said: “Losing a spouse or civil partner can be devastating. We want to provide people with easily accessible support to help them through the difficult period following bereavement.”
Charities disagree, warning that the bereavement support payment will put families under unnecessary pressure, increasing their stress at a time when they need to prioritise their grieving children.
‘On top of grief you have to deal with this news. I’m scared’
When Laura Eastwood’s husband, James, died from skin cancer at the age of 38 in 2015, she was left to care for their three small children. Her youngest son Finlay was just a few months old, daughter Erin was 4 and son Nicky 6.
Eastwood, 35, a psychiatric nurse from Enfield, north London, said: “James endured two years of operations, radiotherapy and chemotherapy, as well as three failed drug trials. He eventually lost his battle in November 2015.”
While his life insurance paid off their mortgage, Eastwood cannot imagine how she would survive without the bereavement allowance of about £500 a month that she receives in lieu of James’s state pension.
“I work two shifts a week as a psychiatric nurse. My mum lives with me for four days a week,” she said. “If the allowance stopped after 18 months I would have to increase my hours or sell my house, causing more disruption for my children.
“I would not be able to spend as much time with them — particularly Finlay, who never knew his father. My standard of living, which is not that great, would fall further.
“The effect this would have on us would be really terrible. The family, which I have worked so hard to rebuild, would have to mend again. It’s so bloody fragile.”
For now, Eastwood’s payments are safe. The government has said the changes will affect only new claimants and that existing claimants will be unaffected — they will continue to receive payments for “the lifetime of their awards”.
She still worries, however, and says the change has added a level of uncertainty to life that she really does not need. “I’m scared about this news. How can people cope? How are they expected to go on? On top of grief you have to deal with this. No one knows how hard this is — every obstacle is a hundred feet high.”
The changes at a glance
Under the old system
A taxable allowance of up to £487.71 a month for widowed parents (on top of a £2,000 tax-free payment to all bereaved spouses or civil partners). The allowance rises with inflation and continues until child benefit is no longer payable for the youngest child or the child leaves school, whichever comes first.
Under the new system
A £3,500 tax-free payment to bereaved spouses or civil partners with children, plus a bereavement support payment of £350 a month, which does not rise with inflation, for 18 months only.