How could the bereavement scheme change affect young families?

Changes to a government bereavement scheme may mean parents with young children who are widowed could miss out on £1,000’s - but could an overhaul bring the benefit to widows and widowers without children, for the first time?

Under current rules, bereaved families may be entitled to a tax-free lump sum payment of £2,000 which is based upon the deceased parent’s National Insurance contributions.  As well as this, you may also be able to claim a maximum Widowed Parent’s Allowance of £112.55 a week. The payments continue for up to 20 years – the maximum age at which a child no longer qualifies for child benefit. The sum amounts to about £119,052 in bereavement payouts.

However, in a shakeup by the Department for Work and Pensions many newly widowed parents stand to lose out on over £12,000.  The change comes from an attempt to simplify the bereavement payment process but latest figures from the DWP show 75% of bereaved families will be worse off. From the 6th April 2017, widows and widowers with children will receive an initial lump sum of £3,500 and those without, £2,500. Following this, those with children could receive 18 monthly payments of £350 and those without, £100, bringing the maximum amount available under the simplified scheme to be just £9,800.

While the changes represent financial recuperation for childless widows and widowers aged under 45, widowed parents of younger children will be the hardest hit, cutting the payout period from 20 years to just 18 months. The government also established that cohabiting unmarried couples, including those with children will continue to be ineligible for the scheme.

Coping with the loss of a loved one is difficult, and is something many people struggle with emotionally and financially. A study by life insurers Royal London found that over two-thirds of people who had lost their partner over the previous five years were financially unprepared. The monetary loss can be devastating - 1 in 5 people find the impact of having a lower income the most difficult element to deal with.

If you are already claiming under the existing scheme, you won’t be affected - the change applies as of 6th April. However if you are not, and are eligible, head over to gov.uk and find out how to apply.

Last updated: Tuesday, 7 February 2017

 
 
 
 

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