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‘Heavy blow to families’ as bereavement benefit reforms hit today

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Written by: Paloma Kubiak
06/04/2017
From today, the benefits available to the bereaved will be significantly reformed with one firm saying that those with young families will be hardest hit following the death of a spouse or partner.

The revised Bereavement Support Payment replaces the old three-tier system of bereavement payments and allowances, including:

  • Bereavement Payment: A one-off, tax-free, lump-sum payment of £2,000 available to those who are either under State Pension age, or over State Pension age if the deceased partner wasn’t entitled to a State Pension based on their own national insurance contributions;
  • Bereavement Allowance: For those without children, they receive £112.55 per week for one year; and
  • Widowed Parent’s Allowance (WPA): For those with children, they receive up to £112.55 per week, which is available until they are no longer entitled to Child Benefit, which is usually when the child turns 18.

Instead, under the new system which comes into force today, the widowed person will receive:

  • A tax-free lump sum of £2,500 (those without children) or £3,500 (those with children),
  • Then, a monthly tax-free payment of £100 (those without children) or £350 (those with children) for 18 months.

Comparethemarket.com said that under these reforms, bereaved families with young children are likely to be the hardest hit, as they will now only get support for 18 months instead of until the youngest child leaves school.

It is estimated that the new payment could amount to a cut of £31,000 for the lowest income families, and over £12,000 for the average working widowed parent.

And research from WAY – Widowed and Young members, shows that families are already struggling under the current system, even without factoring in the changes.

Nearly four fifths of those polled (76%) said that despite having life insurance, death in service, or receiving bereavement benefits, they still saw an overall decrease in household income.

At a time when a third (36%) of parents admitted they needed to decrease their working hours to cope with greater responsibilities, 86% of the widowed parents who received the WPA felt that the benefits made a significant contribution to their finances.

‘The new payment will make things much harder’

Simon McCulloch, director at comparethemarket.com said: “The government is dealing a heavy blow to families at a time when they are already suffering profoundly.

“No one wants to think about the worst-case scenario, but the sad reality is that bereavement can be sudden and unexpected for families. Unfortunately, nothing will stop the pain of losing a loved one, but having financial security can at least help to take away one major worry.

“Even before the bereavement benefit changes, we know that sadly, people often feel unable to cope with the everyday costs alone. Furthermore, after just 18 months on from a loss, the majority (71%) of widowed parents surveyed did not feel financially secure. The new bereavement support payment will now make things much harder, leaving many families significantly worse off.”

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