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Bereavement support extended and payment won’t be taxed

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Written by: Adam Lewis
13/01/2017
The Department for Work and Pensions (DWP) has announced a new modernised Bereavement Support Payment, which will come effect into from 6 April 2017.

The revised Bereavement Support Payment replaces the old three-tier system of Bereavement Payment, Bereavement Allowance and Widowed Parent’s Allowance. The new Bereavement Support Payment aims to provide more accessible help for spouses and civil partners in the difficult period following a family death.

So what has changed?

The old Bereavement Allowance was only available to people aged over 45 at the time their spouse, or civil partner, died. The new benefit is available to people of any age up to state pension age, and extends the period of support form 12 to 18 months.

Additionally the new payment will no longer be taxed and will disregarded in the calculation of means-tested benefits and the benefit cap. This should help those on the lowest incomes by providing extra cash at a time when it is needed.

Under the current rules the award for lump sum Bereavement Payment is £2,000, while the current average award for Bereavement Allowance (for those without children) and Widowed Parent’s Allowance is £104.51 per week.

The new Bereavement Support Payment will consist of an initial lump sum of £3,500 for people with children and £2,500 for those without. This would be followed by a further 18-monthly instalment payable to the surviving spouse or civil partner of £350 for those with children and £100 for those without.

“The old system could be unfair, complex and also act as a trap preventing people from moving on with their lives,” said Caroline Nokes, minister for welfare. “That’s why we are modernising this support into a single, uniform and easy-to-understand benefit that better reflects society and helps people through what can be a very difficult time.”

How do I get the new support?

People will be entitled to the full payment as long as their late spouse or civil partner paid National Insurance Contributions at 25 times the Lower Earnings Limit for any one tax year prior to their death.

Recipients of the Bereavement Support Payment who also receive Universal Credit, or contributory Jobseeker’s Allowance or Employment and Support Allowance, will be able to access Jobcentre Plus support on a voluntary basis from three months after bereavement.

What if I am getting bereavement payments?

The DWP says people receiving the old bereavement payments will continue to do so for the lifetime of their awards. Payments under the War Pension Scheme or Armed Forces Compensation Scheme will not be affected.

Reaction

Stephen Crosbie, protection director at Aegon, welcomed the changes. He said: “The more support people can get following the loss of a loved one the better.” He said: “By making this more accessible, people can focus on grieving and dealing with that loss without having to worry about the immediate financial strain it can cause.”

“However, people should be looking to make arrangements beyond the Bereavement Support Payment, as it is unlikely to provide the financial support needed to maintain their current standard of living should they lose the income from the main breadwinner in the household.

“Purchasing life insurance can provide a financial lifeline for people and their families, and in the event of the unexpected happening can take the pressure off household breadwinners who feel it’s solely their responsibility to make sure that their family has enough income in these devastating circumstances.”

Steve Webb, Royal London’s director of policy, said: “We are pleased that the government has listened to some of the concerns around bereavement support and updated it. However, it’s disappointing that they have failed to address the great unfairness around couples who live together and pay the same national insurance contributions as married couples but are not able to benefit from the Bereavement Payment Support.

“Our research shows that bereaved families face a penalty of around £82m per year simply because the system discriminates against those who are not married. This cannot be justified, especially where children are involved.”

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