Written Evidence from the Department for Work and Pensions (BVB0039)

Information and Awareness on Social Fund Funeral Expenses Payments and Bereavement Benefits

1.     The Government recognises that the period immediately following a death will have emotional, social and economic impacts for the bereaved. People may draw on a wide range of support mechanisms at this time, and it is important that the information made available to navigate processes is as clear and concise as possible. 

2.     Whether it is help with the one-off costs of a funeral or on-going financial help, those who have been bereaved need easy to access and straightforward information on the support available to them.

3.     In the UK when a death is registered the registrar issues a certificate to the informant advising them to notify the Government, via the Department for Work and Pensions, of the death and signposting them to the Bereavement Service and GOV.UK. In addition, the Bereavement Service is linked with Tell Us Once (TUO) whereby notifications of death are received via the system and actioned by Bereavement Service teams.  

4.     Office for National Statistics GB death statistics for 2013 show that there were approximately 45,000 deaths for married people of working age. During the same period there were approximately 40,000 claims to Bereavement Benefit. These figures suggest that awareness of bereavement benefits is high.

5.     Despite the high take up rate the Government accepts that there is more that could be done to promote the support available at the point people become bereaved. The Government is exploring options to pilot an integrated telephony service with TUO telephony teams and the Bereavement Service teams. This would enable customers to report a death, take up the TUO service offering, be signposted effectively to benefit entitlements, and address any other bereavement related issues they may have in one call.  Findings from the pilot will inform how the Government can increase awareness of support available and provide suitable advice at first contact.  

6.     The Bereavement Service, when contacted about a death, already notifies the Social Fund of a possible claim for a Funeral Expenses Payment. Other information provided at point of contact includes the Funeral Expenses

Payments application form telling claimants who would like advice to get in touch with Jobcentre Plus where home visits can be arranged. In addition the GOV.UK webpage for the scheme provides information and links to Bereavement Service helpline, benefits available and other relevant information on arranging and paying for a funeral. 

7.     An information leaflet, attached at Annex A containing information and advice is also available from advice centres and Jobcentre Plus.

Funeral Expenses

8.     Help with the costs of a funeral is available for recipients of certain incomerelated benefits under the Social Fund Funeral Expenses Payments scheme. Prior to the introduction of the Social Fund in 1987, help with funeral expenses was available from two sources: a £30 cash grant, paid on the basis of National Insurance contributions; and a regulated single payment intended to provide for the cost of a simple funeral available to people in receipt of Supplementary Benefit. The size of award was not limited and the amount awarded could be reduced by any money available from the estate of the deceased, Death Grant, contributions from relatives or the claimant's capital over £500. 

9.     From 1987, Social Fund Funeral Expenses Payments have provided a significant contribution towards the cost of a simple, respectful, low-cost funeral. The scheme meets the full costs of a cremation or burial including the purchase of a grave with exclusive burial rights. Other costs such as the coffin, church and funeral director fees are limited to a maximum scheme payment of £700. There is no restriction on the type of funeral expenses that can be claimed under this category, and applying the limit allows the bereaved a choice on how best to spend the payment in the way they choose. Furthermore the Government believes it is important that, where possible, individuals are encouraged to take responsibility for their end of life planning and do not leave their family or taxpayers with the full financial burden of meeting their funeral costs.

10. However, this is not just an issue for Government. Providers of funeral and bereavement services including charities, religious organisations, funeral directors, local authorities and owners of crematoria all have a role to play in ensuring there are funerals accessible for everyone. The Government believes that where a family can take part or all of the responsibility of the cost of funeral arrangements they ought to, however there are times when state support is appropriate. 

Current Funeral Expenses Payments System

11. The Social Fund provides payments to people in receipt of certain benefits and tax credits. These “regulated payments” - which include providing a contribution towards the costs of a funeral - are made in specific circumstances and they must be paid if all the entitlement conditions are met. Applications are made by post and via the Bereavement Service.

12. To claim for a Social Fund Funeral Expenses Payment an applicant must have organised a funeral for a close friend or relative in the last 3 months and be on one of the following qualifying benefits:

•         Universal Credit; or              

•         Income Support, Employment and Support Allowance (Income

Related), Jobseeker’s Allowance (Income Based) or Pension Credit; or 

•         Child Tax Credit (above the family element); or              

•         Working Tax Credit with a disability or severe disability element; or Housing Benefit.

13. There are two elements to the payment: 

•                      the necessary cost of the burial or cremation - this payment is made directly to the relevant Local Authority unless a private cemetery has been used (for example, one observing specific religious beliefs); and

•                      other funeral expenses - this payment is granted up to £700 for other costs incurred for a funeral. The amount has remained at the same level since 2003. 

14. Funeral Expenses Payments can be made in advance of a funeral taking place if a final bill or contract has been received by the decision maker, and if all the necessary information is received with the claim form the application is processed straight away.

15. The Government accounts for Funeral Expenses Payments as loans which are recoverable from the deceased’s estate. Any money available from payments from funeral plans and contributions received by the applicant for the funeral is taken into account. Recovery is minimal though, as there is often no estate to recover from. Any savings which the claimant has are ignored. 

16. A funeral payment is paid in around 7% of deaths in Great Britain. In 2014/15 there were 51,000 claims processed, of which 32,000 resulted in an award. 

17. The official average actual clearance time target for making decisions in 2014/15 was 16 days.  A level of 17.05 days was achieved which was an improvement on 18.44 in 2013/14.

Table 1: FEP volumes and expenditure 2002/03 – 2014/15

18. The Committee asked for evidence on a number of points around costs of funerals. The Government knows that in the majority of claims the funeral costs do exceed the amount included in the Social Fund Funeral Expenses Payment.

That is why in 2012 the Government made interest free Social Fund Budgeting Loans available for funeral costs in addition to the Funeral Payment. The extension to Budgeting Loans removes the need for bereaved families to turn to high cost lenders and removes the worry of meeting the funeral director’s bill. This move not only supports bereaved families, but also helps to reduce funeral directors’ exposure to bad debt. 

19. The Government believes it is important that the scheme does not influence or inflate the prices charged by the funeral industry for a simple funeral. The Royal London National Funeral Cost Index Report 2015 reported that funeral industry inflation rate is higher than in wider economy: funeral costs increased by 3.9 per cent in the last year, 2014/15, at a time of almost zero inflation. Nevertheless, although the £700 cap is not index-linked, there is no cap on the necessary costs category. Inflation in funeral costs has been reflected in the year-on-year rise in average payment amounts. 

20. The Government also encourages personal and family responsibility for meeting funeral costs and the importance of considering end-of-life planning.

21. The Committee asked if improvements could be made to the application process. The Government continually looks to improve its service. For example, in 2015 informal discussions have already taken place with stakeholders, including the National Association of Funeral Directors, representatives from life assurance companies, academics and advice services on possible improvements. These discussions carry on and there is a current focus on how to improve information on eligibility. 

22. The roundtable that the Minister for Pensions chaired recently has led to work to understand how we can do more to get the right information, to the right people, at the right time. 

23. This year the Department introduced a new information capturing tool at the

Bereavement Service and changed the way claims are received. It is anticipated these will reduce the time between a Funeral Expenses Payment application being received and a decision made.

Bereavement benefits

24. Bereavement benefits in their current form have evolved from the Widows’, Orphans’ and Old Age Contributory Pension Act 1925 which provided a weekly pension throughout widowhood to all widows. But over time the rise in employment rates for women has dispelled the myth that the state should need to provide an indefinite pension for women who had been bereaved. Entitlement was extended to widowers in 2001 and civil partners in 2005. 

25. Nevertheless, despite these important changes, reform of bereavement benefits has tended to have a narrow focus, addressing an immediate need for change rather than questioning the role they should play in the modern welfare state, and whether they continue to provide effective support to bereaved people. The incremental nature of change has resulted in a complicated system in need of modernisation. 

26. Currently there are three different payments made to widows, widowers or civil partners under state pension age at the time of bereavement. There is a lump sum – Bereavement Payment – and two different benefits - Bereavement Allowance and Widowed Parent’s Allowance - which are dependent on a claimant’s age and whether or not they have dependant children. The payments are all non means-tested and are paid to people both in and out of work.

27. There are three contribution conditions governing eligibility to Bereavement Benefit, all based on the deceased spouse’s national insurance record. The conditions do not apply in the same way to each of the three possible bereavement benefit payments.

28. The result of this complexity is that it is very difficult for claimants to anticipate whether they will qualify, for how much and for how long they will receive payment for. And the benefits are complex to administer as well. Some claimants will qualify for just a lump sum payment, whilst  others can receive weekly payments for as long as 20 years. So, in December 2011, the Government launched a public consultation as part of its modernisation of bereavement support - “Bereavement Benefit for the 21st Century” [1]. Its response was published in July 2012[2]. In the Executive Summary of the public consultation (pages 8 and 9) the Government set out its principles for reform:

“There is an important role for government to play in providing some relief from the financial pressures associated with working age spousal bereavement. Bereavement benefits should provide financial support in the short term to aid the process of readjustment. For those without employment, the government should, at an appropriate time, encourage a supported return to work. This process should be as straightforward as possible, providing elements of certainty in a period of upheaval.

Our aims for modernised bereavement benefits are that: 

•         they should be simple to understand and to claim;

•         they should provide fast, direct, financial help for immediate needs following the bereavement of a spouse or civil partner; 

•         they should give recipients the flexibility they need to regain control of their

•         situation in the period immediately following bereavement;

•         there should be additional support for families, to recognise the additional costs associated with raising children;

•         they should allow recipients to access the financial and work focused support provided by Universal Credit at a time that is right for them; and

•         they should be fair and promote self-dependency.

29. These principles have been reflected in the new simpler and fairer system of Bereavement Support Payment (BSP) which will come into force in April 2017.  Some of the key elements are discussed in more detail below.

Modernising bereavement benefits

30. The Government accepts the need to modernise and reform bereavement benefits. That is why from 2017 it will be introducing the BSP to replace the current suite of benefits for new claims. The legislative changes were brought in through the Pensions Act 2014. Eligibility criteria are being reviewed and the new arrangements will focus financial support on the short term to help with the additional costs associated with bereavement. Those already in receipt of the existing benefits at the time the change is introduced will not be affected. The Government is also simplifying a complex administrative process. These changes will initially require extra financial investment from Government to support the changes. 

31. BSP will consist of a lump sum followed by 12 monthly instalments and those with children will receive a higher amount. Unlike existing Bereavement Benefits, these payments will be paid in addition to other welfare benefits, including Universal Credit, and will be disregarded from the benefit cap and will not be taxable. BSP will be easier to understand and fairer to surviving spouses and civil partners. The National Insurance requirements will be simplified with just one common set of contributions needed. They will maintain the contributory principle whilst allowing more people to qualify for a full payment, rather than incremental payments as now. There are also fewer changes of circumstance that will affect the award (including re-partnering or marrying) and the amount and duration of the payments will be known at the outset of the award.

32. Straight away the Government anticipates an extra 10,000 people[3] per year will be better off due mainly to the removal of the lower age limit which will allow those under the age of 45 without dependant children to have entitlement to the new benefit. 

33. In addition, those who claim BSP alongside other welfare benefits will also be better off as unlike the current provisions, BSP will not be taken into account when determining eligibility for benefits such as Universal Credit, Jobseeker’s Allowance, Employment and Support Allowance and Income Support. This will protect the most vulnerable as the financial support received will be in addition to earnings as well as other welfare benefits, thus providing additional income to aid with the financial costs associated with bereavement. This change will cost an estimated £250macross the first four years of the reform[4], and will benefit approximately 20,000 people per year[5].

34. As well as BSP being disregarded for Universal Credit purposes, a surviving spouse in receipt of Universal Credit will not have any work search or availability requirements imposed on them for 6 months following bereavement. After which

time conditionality will be tailored according to the claimant's personal circumstances and capabilities, including being lifted entirely where it is appropriate to do so. All bereaved partners or parents in receipt of Universal Credit are eligible for conditionality easements, not just those receiving BSP.

35. Indicative amounts for BSP are as follows:

•         Standard Rate (For those without dependant children) -Lump Sum £2,500 plus 12 monthly payments of £150.

•         Higher Rate (For those with dependant children) - Lump Sum £5,000 plus 12 monthly payments of £400.

36. The Social Security Advisory Committee broadly welcomed the changes in its recent report (page 6) and described some elements as - “significant improvements on (the) current provision” [6].   The Government knows that the Committee and other stakeholders have expressed concerns about some parts of the new arrangements, particularly around the duration for which the benefits are paid and entitlement for unmarried couples. The Government considered these at length during the consultation stages and during the passage of the Pensions Act 2014:

•         Duration: BSP is designed to provide support with the immediate additional costs associated with bereavement, rather than providing an income replacement for on-going expenses. The Government recognises that bereaved parents may incur increased expenses and this is acknowledged by awarding a higher rate to those with dependant children. The Government has already made a commitment to monitor and review the effect of BSP. This will be carried out at a point when sufficient evidence is available to assess all aspects of the new arrangements.

•         Unmarried couples: A key principle of the National Insurance system is that all rights to benefits derived from another person’s contributions are based on the concept of legal marriage or civil partnership. Extending the eligibility of the BSP to unmarried couples would increase expenditure by several hundred million pounds over the early years of the new scheme. The Government made reference to this issue in the bereavement benefits consultation, stating unambiguously that the question of extending bereavement benefits to unmarried couples was not something it favoured and that position has not changed.

Link to DWP guidance on what to do after a death

January 2016