From 6th April 2017, the government is changing bereavement benefits in order to modernise and make the support available easier to understand.
The Bereavement Support Payment replaces what was previously known as the Bereavement Payment, Bereavement Allowance and Widowed Parent’s Allowance.
However, the bereavement payments under this new system will reduce the amount of benefit available for parents, with an estimated 75% of bereaved parents being worse off1.
Let’s take a look at what will be payable under the new system, and the simple solution you can put in place for your clients to help bridge the bereavement support gap.
Intended to cover the cost of a funeral for the deceased, from 6th April a tax-free lump sum of £3,500 will be payable to those with dependent children – or £2,500 to those without.
This is actually an improvement (previously £2,000 under the bereavement payment), but may not be enough for many families – the average cost of a basic funeral using a funeral director is £3,6752.
Monthly tax-free payment
Previously, under the Widowed Parent’s Allowance, monthly payments were provided until, amongst other things, the youngest child no longer qualified for Child Benefit, which could be up to the age of 20.
From 6th April 2017, a tax-free monthly payment of £350 for those with dependent children – or £100 for those without – will be payable for only 18 months.
What happens if the youngest child is just a baby when their parent dies? In the past, the surviving parent would receive £112.55 per week up until the child was 20 years old. With the new system, it’s estimated that 91% of bereaved parents will be supported for a shorter time1.
What’s more, if your clients are co-habiting couples and aren’t married or in a civil partnership, they won’t be eligible for the bereavement benefits. This creates a further concern for an increasing number of clients, particularly those with children, who could be left in financial difficulty if their partner died. If both parents work, it’s been estimated that 88% will be worse off financially under the new system.