Co-habiting couples lose out on £82m per year as benefits system favours marriage

27th January 2016


Out-of-date benefit rules which treat cohabiting couples as second class citizens are costing them £82 million per year, an insurer has claimed.

Under current rules for National Insurance benefits, where one member of a couple dies, the surviving partner may be entitled to a range of financial support including a £2,000 lump sum and ongoing National Insurance bereavement benefits which can be worth more than £10,000. But eligibility is restricted to those who were married – cohabiting couples get nothing.

New calculations by Royal London based on official death and cohabitation rates suggest that these rules have cost working-age cohabiting couples £82 million in lost benefits in the last year.

As the number of people cohabiting continues to rise, and as the average age of cohabiting couples increases, these losses are set to grow, the insurer says.

While the National Insurance system ignores cohabitation, other parts of the benefit system do take account of cohabitation, but only in order to reduce entitlements.

Income-related benefits such as Housing Benefit look at the income of a whole household when determining if a claimant has enough money, and for these purposes the income of a cohabiting partner is counted against the claim.

Royal London director of policy and former pensions minister Steve Webb says: “Many unmarried couples have been living together for many years and are financially dependent on each other.

“Yet at a time of bereavement the benefit system treats them as though their partnership never happened.

“This is despite paying the same National Insurance Contributions into the system as everyone else.

“When it suits the Government to treat two individuals as a couple it does so, but when it comes to paying money out the Government is happy to deny the existence of a relationship. It is hard to see how this double standard can be justified.

Webb adds: “A benefits system that was designed in the 1940s needs to be brought up to date. With over six million people in Britain living together as couples, a large and growing number of people risk being left without support in the event of bereavement unless the system is changed.”

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