Bereavement Support Payment
Fiona Seymour highlights proposed changes to the system of bereavement benefits
This article was originally published in the March/April 2016 issue of Adviser magazine and was correct at the date of publishing.
In December 2011, the coalition government began a consultation to look at reviewing the current system of bereavement benefits, stating that more needed to be done to ensure that bereavement benefits better served their purpose. The government stated that the complicated payment system and eligibility conditions made it difficult for people to understand what they were entitled to receive and payment of long term benefits such as Widowed Parents Allowance risked creating welfare dependency. The government published a consultation paper outlining plans for reform.(1) At this time, the government stated there were no plans to change payments made under the War Pensions Scheme, the Armed Forces Compensation Scheme, or Social Fund Funeral payments. Those already in receipt of existing bereavement benefits when the new scheme was introduced would also not be affected.
The consultation stated that they therefore intended to:
- simplify the payment system, with support focused on the period immediately following bereavement
- simplify the contribution conditions, by basing full payment on a single year of NI contributions
- remove lower age conditions for the claimant
- re-name the benefit
- remove dis-entitlement if the claimant re-married or began cohabiting
Two specific proposals were put forward under the consultation to replace existing bereavement benefits:
- Make an single lump sum payment of £6,000 for claimants without children and £10,000 for those with children (disregarded in UC for one year)
- Make a lump sum payment of £3,000 and a monthly allowance of £250 for a year for claimants without children, and a lump sum payment of £5,000 and then a monthly allowance of £400 for a year for those with children (monthly payments treated as income for UC)
Following the consultation, the government published its response in July 2012.(2)
The benefit was to be renamed ‘Bereavement Support Payment’.
Payment of £2,500 as a lump sum with ongoing monthly payments of £150 for a year for claimants without children, and a lump sum of £5,000 with ongoing monthly payments of £400 for a year for those with children.
All payments disregarded for UC for 12 months and disregarded as income for the purposes of determining the benefit cap (Later statements from DWP confirmed that the payments would also be ignored for legacy means-tested benefits).(3)
Payments anticipated to be tax-free (later confirmed by HMRC).(4)
Recipients of the payment who also claim UC, contributory JSA or ESA would be able to access support from JC+ on a voluntary basis for three months after bereavement and would not be subject to any conditionality for a further three months.
In May 2013, the Pensions Bill (now The Pensions Act 2014 which received Royal Assent in May 2014)(5) introduced the Bereavement Support Payment in respect of deaths which occur after the date the legislation takes effect (yet to be determined but potentially 2017). New eligibility requirements were added that the claimant must be ordinarily resident in Great Britain or a ‘specified territory’ (to be defined in regulations) and that entitlement would not apply to prisoners.
In December 2015, the Work & Pensions Committee launched an enquiry into funeral poverty and bereavement benefits, seeking views on how the current system of bereavement benefits worked, with the deadline for responses by 5/1/16.(6)
Advisers need to be aware of these changes, and keep an eye out for the detailed regulations which have not yet been published. Those who would previously have been entitled to Widowed Parents Allowance may find that they receive significantly less under the new system, especially parents with young children who could have received such payments for many years, as opposed to the one year payment duration under the Bereavement Support Payment. However, the simplification of the NI contribution conditions; the removal of the lower age limit and the ability to retain entitlement on re-marriage or co-habitation could bring entitlement to others who may not have qualified at all under the previous system.
Fiona Seymour works in the Welfare Benefits Expert Advice Team at Citizens Advice and is benefits subject editor for Adviser.
End notes
1. https://www.gov.uk/government/consultations/bereavement-benefitfor-the-21st-century
2. See (1)
3. para 9 Government response to SSAC Occasional Paper 16 November 2015https://www.gov.uk/government/publications/government-responsessac-report-on-bereavement-benefitreform
4. Exemption from Income for the BSP — HMRC Tax December 2014https://www.gov.uk/government/publications/exemption-from-incometax-for-the-bereavement-supportpayment
5. see Sections 30–32 and Schedule 16http://www.legislation.gov.uk/ukpga/2014/19/contents/enacted
