Bereavement Benefit for the 21 st Century. 1. Introduction research on bereavement at the Social Policy Research Unit

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1 Bereavement Benefit for the 21 st Century Public consultation by the Department for Work and Pensions Response to the consultation from the Social Policy Research Unit, at the University of York 1. Introduction research on bereavement at the Social Policy Research Unit The views expressed in this response represent knowledge gained through research at the Social Policy Research Unit (SPRU). SPRU is an independent research centre established in 1973 at the University of York, and one of the largest social science research units in the United Kingdom. Since 2001, the Unit has maintained a stream of research and enquiry into the economic implications of death of a family member. Most recently, the Unit has conducted an influential study of the economic implications of death of a partner (Corden et al, 2008) which was funded by the Economic and Social Research Council. Members of the research team advise the Money Advice Service in development of services for bereaved people, and a current study of socio-economic implications of bereavement for Scotland, and are active members of academic and practitioner forums for palliative and bereavement care, and organisations which support carers. The bereavement research at SPRU is conducted within an overall programme of work focused on the organisation, delivery and impacts of welfare, employment and social security policies. In October 2011, SPRU presented a Round Table event with Dame Carol Black, addressing bereavement as an issue in health and well-being at work. SPRU has submitted evidence to the Government s 2011 Sickness Absence Review, drawing attention to issues around bereavement. This paper is organised as follows. First, we address the DWP s case for change, with the current policy aims and the principles for reform (Chapters 2 and 3 of the consultation paper). Then we provide research evidence which helps answer the consultation questions (set out in Chapter 4) to which DWP seeks answers. A final section summarises our views. 2. The case for change The current bereavement benefits (as stated to SPRU by DWP policy makers in 2008) are insurance based benefits intended to ensure that everyone has access to some support at this difficult time. They go some way to replace the earnings potential of the person who died, and reduce the effect of loss of household income. They thus provide breathing space 1

2 to enable people to deal with emotional and practical upheaval, and longer term support where the needs of children make self-support more difficult. The consultation document reformulates the policy aims of bereavement benefits (page 12) to fit the current policy thrust of welfare reform. We note: emphasis on simplicity, clarity and ease of claiming new requirements for fairness and promotion of self-dependency a slight shift of the argument for additional support for families with children - away from the idea that needs of children make self-support harder and towards recognition of additional costs of raising children, and requirements for fit with the new Universal Credit, and enabling appropriate and timely transition to Universal Credit for people who might use this. Within this requirement, there is reference to enabling access to work focused support. We look at the evidence for this reformulation of policy aims. Complexity There is considerable evidence from social research (Corden et al, 2008; Oldfield et al, 2012), from advice agencies and from organisations in touch with bereaved people that the complexity of the current benefits package does undermine effectiveness as an insurance policy. There is widespread lack of awareness, confusion and misunderstanding of the different benefits, and it is hard for people (and, importantly, those who support and advise them) to anticipate whether they will qualify and how much they might receive for how long. There is evidence that administrative errors, requests to pay back over-payments of bereavement benefits, and discovering taxation of unclaimed benefits are very hard for people to deal with, practically and emotionally. Complexity increases administrative costs. Fairness There is also some evidence from social research that recipients and non-recipients want the benefits to be fair. In our own research, things that seemed unfair included taxation of bereavement allowance; taxation of widowed parent s allowance (particularly in comparison with non-taxation of child maintenance payments) and the fact that this allowance would end on remarriage; and the complete exclusion from benefits of people who had not been married or in civil partnerships, including those with children of the partnership. Self-dependency Part of the argument that reformed benefits should promote self-dependency rests on assertions in the consultation paper that current benefits serve as a disincentive to maintain contact with the labour market (page 13). We do not see strong evidence for this. Statistical analysis of the British Household Panel Survey data set (Corden et al, 2008) provided no evidence to support this. This analysis showed that under pension age, men s 2

3 labour market incomes (as percentage of household income) generally reached (or exceeded when equivalised) pre-bereavement levels during the second year following bereavement and within months of the death. Women s incomes took longer to reach pre-bereavement levels. However, this seemed to be because jobs retained, re-entered or taken up by women were much less remunerative than those of deceased partners the usual structural/employment disadvantages that women in lower social positions face in the labour market. It is important to remember here that it is women in lower social positions who are more likely to experience death of a partner. This is due to social class differences in morbidity/mortality, and incidence of violence and accidents. Women in lower social positions whose partner dies are more likely to live in disadvantaged areas with fewer employment opportunities. Overall, in the SPRU study, the number of women in work fell only slightly after their partner s death (67% to 64%). The fall was larger among men (67% to 55%). Yet women were more likely to receive bereavement allowance (49% compared with 2% of the men) or widowed parent s allowance (17% compared with 0%). Bereaved men were generally older than bereaved women; both were typically within 10 years of state retirement pension age. Qualitative interviews in the SPRU study showed that reasons for not working after a partner s death included poor health, finding it too hard to combine work and family care, employers being unwilling to accommodate to people s changed circumstances, and belief that children who had lost one parent needed the full attention of the surviving parent, particularly when a child had special needs. The study by Oldfield et al (2012) confirmed these findings. Those women interviewed by SPRU who became non-working sole parents when their partner died (both those receiving widowed parent s allowance and those not) had all started thinking relatively soon how they would re-engage with the labour market, and within months some were making plans for, or had embarked on further education or training. Universal Credit We note that currently just over 30% of recipients of Bereavement Allowance or Widowed Parent s Allowance claim other income maintenance benefits (page 17) although this figure might increase when Universal Credit is introduced. The perceived importance to recipients of these ongoing bereavement benefits and the likelihood that many bereaved partners will not use Universal Credit leads to an argument for adapting Universal Credit to take account of the needs of bereavement benefit recipients, rather than adapting a new benefit to suit Universal Credit. Options 1 and 2 essentially treat people differently. Option 1 is a lump sum with the suggestion that this is disregarded as capital for calculating Universal Credit. This strategy means a reformed bereavement benefit fulfils its policy function of helping bereaved people whose income falls after bereavement and who face a time of temporary financial hardship. Under Option 1 the lump sum is paid to all eligible people regardless of their benefit status. 3

4 Under Option 2 the proposal is that the monthly payments will count as income for the purposes of Universal Credit. The value to recipients of Universal Credit, over 12 months, is therefore less under Option 2. There seems no policy reason why this should be the case. In addition, under Option 2, some people will become ineligible for any Universal Credit (and thus for any other services or provision which depend on receipt of Universal Credit). 3. The consultation questions What benefits and risks do you see in the proposal to move from the current payment system for bereavement benefits to a single lump sum payment? Would offering a choice between a single lump sum payment and a smaller lump sum with one year s ongoing regular payments be a preferable alternative? Decision making can be extremely difficult after a bereavement. What impact might this have on the effectiveness of options 1 and 2, or a choice between the two? There is strong evidence that the current Bereavement Payment is of considerable help to people at all income levels, providing an immediately accessible amount of money which helps meet immediate needs, such as paying for funerals, paying utility bills inflated by the costs of care during the last months of life, or meeting daily living costs before access to other income streams has been arranged. The value of the payment does not reach the total average cost of a funeral, however (Sun Life, 2011). This may be important for regulation of price setting in the funeral industry. There is considerable evidence from social research, from organisations which support bereaved people and from the wider literature on psychological and emotional components of grief (see for example Gentry et al, 1995a; Quilliam, 2008) that making decisions is very hard in the period immediately following the death. In the period of extreme distress, emotional turmoil and intensity of feeling, there is impaired capacity for decision making and rational forward planning. Indeed, withdrawal from decision making is common. Motivation and capacity to look to the future may be minimal, especially when death is unexpected, and involves violence or accident (a more common experience among younger bereaved partners). The expectation that recently bereaved partners will be able to make important decisions about apportioning a large lump sum payment across immediate and future financial needs does not fit the evidence. This applies similarly to the suggestion that bereaved people might choose whether to have a large lump sum or smaller sum with ongoing payments. There is additional evidence from a number of sources of vulnerability in financial decisionmaking in the period following a death related to: over-spending and consumption as a psychological response to grief, including overspending on comfort eating, drugs/alcohol use, getting away (see, for example, Allen, 2007; Eng et al, 2005; Gentry et al, 2005b) 4

5 vulnerability in purchasing funerals, including commercial pressures within the funeral industry and strong family and cultural influences atypical spending driven by emotion, including different forms of memorialisation; large donations to care and support organisations which were important during the last months of life financial abuse, such as pressures from creditors, poor commercial practices, and criminal activity (see, for example, Quilliam, 2008) pressures and demands within families, including expectation of help with debt reduction, living costs, and compensatory payments to relatives disappointed by inheritance arrangements. The costs of such vulnerability in spending decisions are not only economic, but affect people s emotional responses and adjustment to bereavement and family relationships in the longer term. Implications for the wider society include effects on child poverty, health care needs, and family conflict. Is it right to apply the same time limit for bereavement benefit payments to people with dependent children and those without? Most bereaved partners with dependent children (and most recipients of widowed parent s allowance) are women. DWP statistics show that receipt of widowed parent s allowance typically lasts for three years, although some claims may continue for up to 18 years. There is very little information about what happens to those who leave this benefit. The evidence is that the longer term financial impact of death of a partner has much to do with whether or not the bereaved person had occupational and private pension entitlements through their partner s lifetime contributions, and whether or not they themselves had paid work. Younger people (including those with younger children) are likely to have less or no accrued survivor s benefits from partners who had been in the labour market for a shorter time. Quantitative research evidence (Corden et al, 2008) is that it took months for most bereaved people below state retirement age to regain the equivalised net income they had just before their partner died, and that it took longer for women than men. At the lowest income levels, there were dips into poverty during this trajectory. There is qualitative evidence of considerable financial difficulty for some people during this period, both those with and without children. Some were still in difficulty for two to three years. Fuel and housing costs remained an underlying cause of concern for many. We do not see firm evidence here for limiting the time period for payment of ongoing benefits to people, either with or without children, to 12 months. 5

6 Is it right to provide access to the financial and employment support provided by Universal Credit, including the associated conditionality, to those in receipt of bereavement benefits? As presently designed, Universal Credit places conditions on recipients to prepare and look for work. As described above, research shows that most bereaved partners retain, return to or enter work within 18 months of bereavement. Many factors influence the pace at which this happens. Subjecting people whose partners have died to the same requirements and the same regime of sanctions as other Universal Credit claimants is presumably not a policy aim. To do so would undoubtedly lead to unintended emotional and psychological stress for many, and in some cases lengthen time away from work. It is not clear whether a specific set of rules (i.e. in regulations) is needed to exempt bereaved people from mainstream conditionality or whether Jobcentre Plus (and Work Programme Providers) will be given discretion within Universal Credit regulations to adopt appropriate conditions according to individual circumstances. It should be remembered that bereaved people who are new claimants of Universal Credit will spend up to one year with Jobcentre Plus before being referred to a Work Programme Provider. It is essential therefore, that frontline Jobcentre Plus staff have appropriate training to be able to respond to the needs and aspirations of bereaved people and be equipped to offer back-to-work support requested. This applies equally to Work Programme frontline staff, and therefore poses a particular policy challenge for DWP since Work Programme providers are not subject to any regulation or oversight of their staff recruitment or training, or of the services and support they offer. How do you think the proposal to remove the current age split in determining the level of bereavement benefits payments would impact people? This proposal removes a source of inequity and addresses the often significant financial difficulties faced by younger bereaved partners, and is thus broadly welcome. The current age split, with no entitlement to Bereavement Allowance below age 45 years, leads to misunderstanding and confusion, with some feelings of discrimination and unfairness among younger people. The study by Oldfield et al (2012, p14) shows how a woman not old enough to qualify for Bereavement Allowance but whose children were just too old for her to be entitled to Widowed Parent s Allowance felt doubly discriminated against. The previous logic of the age split was that older people needed more breathing space to come to terms with their emotional turmoil and practical upheaval. We do not know how far this is now true. It is among the younger age groups that death of a spouse is more likely to be unexpected, or especially traumatic (through violence/accident/suicide/substance abuse/military or civil protection service), and survivors must cope with unpreparedness or extreme shock, which in turn may lengthen a process of readjustment. Younger deceased partners are less likely to have life insurance or to have contributed to schemes with survivor s benefits; and more likely to leave outstanding credit card and other debts, and 6

7 mortgages. In the current economic climate, younger people face an increasingly harsh labour market, and bereaved partners generally are likely to live in areas of disadvantaged labour markets, given the social-economic differentials in death of a partner. At the other end of the age profile, where partners deaths are more likely to be from chronic illness or after periods of palliative care, the surviving partner may have had time to think ahead to the period beyond the death or make some plans. They are more likely to have non-state survivor s benefits, may have stronger links with the labour market, and some may have support of adult children. We would expect DWP to model the numbers and characteristics of those people who would be newly drawn into eligibility by removing the current age split. Numbers would seem unlikely to be high, even if the contribution conditions are relaxed. This proposal offers gains in administrative simplicity, transparency, perceived fairness, and likely effectiveness in targeting support where it is needed. How can the government minimise any risks identified? Are there other forms of support that might be of benefit to recipients of bereavement benefits? Making available an immediate lump sum payment that does not exceed the average cost of a funeral by much (if at all) would help to reduce risks associated with vulnerability in financial decision-making. Making available further additional payments during the following month period would help reduce risks of poverty or severe financial hardship during the period of adjustment to bereavement. There are different ways in which a lump sum and a series of further payments might be combined, but it will be important to make all components of the benefit non-taxable, in order to remove the risk of reduction of value of benefits to those people who may claim Universal Credit. Risk of confusion and misunderstanding will be reduced by simplification, through removing the age split, and having one set of the more relaxed NI contributions criteria. These measures will enable DWP to publicise the benefit more easily and effectively, and will enable people who support and advise bereaved people to give appropriate and helpful information to individuals. Qualitative research with recipients (Oldfield et al, 2012) showed that some people would have welcomed sensitive employment support at an appropriate time. However, the consultation document discusses availability of employment support to bereaved people only in the context of Universal Credit, and we know that many bereaved partners will not be covered by Universal Credit. There is scope for DWP to make a more general and systematic offer of advice and employment support to all recipients of bereavement benefits, with provision for repeated offer and follow-up. One way of doing this might be to have, in each Jobcentre Plus office, a member of staff with expertise in responding to needs of bereaved people, who would be available to give appropriate information, keep in touch if appropriate, and make links for the bereaved person to receive specialist financial and 7

8 employment support from an appropriate local support organisation or bereavement support service which could demonstrate to DWP their appropriate expertise. The series of payment points for delivery of the lump sum and further payments during subsequent months would provide DWP with the mechanism to keep in touch with recipients in a variety of ways and at different appropriate times, to ask whether and what support was needed. The proposed NI contribution conditions The proposal to base the NI contribution conditions for the reformed benefits on the deceased person having paid sufficient Class, 1, 2 or 3 contributions in any one tax year will make the scheme simpler to understand and explain, will widen access, and will help to reduce confusion and claims from people who are not entitled. The scheme would be even fairer if NI credits counted towards eligibility. We suggest DWP consider including the survivor s NI contributions as eligibility criteria. Thus, the contribution condition would be that either the husband, wife or civil partner who died, or their surviving partner, had paid sufficient contributions in any one tax year. This adjustment would make the scheme even easier to understand and explain, and would fit the circumstances of death of a person with an employment history interrupted by chronic ill-health, or family care but whose partner had maintained an employment record. Again, we would not expect large numbers of people to be newly drawn into eligibility. Cohabitation or remarriage Ceasing to suspend or remove entitlement to benefits from people who remarry or cohabit removes one of the components of the current scheme perceived as unfair by current recipients, and reduces the amount of policing required from DWP and one category of potential fraud. Naming the benefit Since the proposals are for adjustment of existing benefits, it would seem appropriate, for public understanding, to retain the word bereavement in the title. The word death should certainly be avoided, as this has widespread negative connotations. The proposed benefit provides a form of bereavement support. In order to distinguish it from Bereavement Support services, which are widely recognised and used as services providing emotional support and dealing with grief, it might be called Bereavement Support Payment. Summary From the evidence of research findings, the Social Policy Research Unit supports: Avoiding any requirements or expectations for people to make major financial decisions in the period immediately following a partner s death. 8

9 Continuation of payment of an immediate lump sum, to meet financial needs which are common at all income levels. Avoiding, as far as possible, an increased risk of vulnerability in spending which would attach to a lump sum of high value. In addition to the lump sum, a further series of a limited number of additional payments during a period set according to research findings about the time needed for financial adjustment. This will be at least one year, but the possibility of 18 months should also be considered. Further detailed consideration to taxation issues, at the level both of policy and implementation, in order to maximise the value of the benefit to all recipients. Adopting the NI contributions criteria for eligibility, as proposed in the consultation document, with further consideration to including NI credits, and taking account of contributions paid by either partner. Ceasing to suspend or remove benefits on remarriage or cohabitation. DWP actively seeking ways of offering employment support to recipients, at any stage after bereavement, and whether or not recipients apply for Universal Credit. Finally, we note that the needs of bereaved people not in recognised marriages or civil partnerships, were out of scope for this consultation, as were Social Fund Funeral Expenses Payments. We recommend that DWP gives further consideration to these related social security matters. People who experience death of a life partner to whom they were not legally married or linked through civil partnership face a similar range of emotional, economic and practical issues in bereavement as those whose partnership was formally registered, and there is evidence of considerable financial hardship for such people, and their children. People s current behaviour around marriage and relationships is such that both tax credits and the new Universal Credit are based on household and couple units whether or not partners are married or in civil partnership. We recognise that there are some practical problems in validation of a cohabiting relationship after one partner has died, especially where people were not benefits claimants. However, we recommend that DWP look further at financial provision for bereaved people whose partnerships were not formally registered, perhaps when the Law Commission s proposals for reform of existing statutory remedies applicable on the death of a cohabitant under the Inheritance (Provision for Family and Dependants) Act 1975 are adopted (The Law Commission, 2007). In the matter of Funeral Expenses Payments, some qualitative research is currently being undertaken at the University of Bath, and this will provide useful findings on which to build further work on provision of financial support for paying for funerals. 9

10 References Allen, C. (2007) The poverty of death: social class, urban deprivation and the criminological consequences of sequestration of death, Mortality, 12, 1, Corden, A., Hirst, M. and Nice, K. (2008) Financial Implications of Death of a Partner, Working Paper No. ESRC 2288, Social Policy Research Unit, University of York, York. Available at Eng, P., Kawachi, I., Fitzmaurice, G. and Rimm, E. (2005) Effects of marital transitions on changes in dietary and other health behaviours in US male health professionals, Journal of Epidemiology and Community Health, 59, Gentry, J.W., Kennedy, P.F., Paul, K. and Paul Hill, R. (1995a) The vulnerability of those grieving the death of a loved one: implications for public policy, Journal of Public Policy and Marketing, 14, 1, Gentry, J.W., Kennedy, P.F., Paul, C. and Paul Hill, R. (1995) Family transitions during grief: discontinuities in household consumption patterns, Journal of Business Research, 34, 6a7-79. The Law Commission (2007) Cohabitation: The financial consequences of relationship breakdown (Law Com No 307) Cm 7182, London. Oldfield, K., Adams, L. and Gunstone, B. (2012) Bereavement benefits: Findings from qualitative research, Research Report 790, Department for Work and Pensions, London. Quilliam, E.T. (2008) The often-forgotten nonfuneral consumer grief for the grieving, Journal of Consumer Affairs, 42, 3, Sun Life (2011) The Trouble with Dying, Sun Life Direct Cost of Dying Survey, Sun Life Direct, Bristol. 10