Co-habiting couples with children have different financial entitlements to married couples following the death of a partner. But two rulings in the Supreme Court could improve the outlook for parents who choose not to marry. So what are your rights and entitlements if you lose your partner, but weren’t married?
- ‘Unmarried with kids’ couples are the fastest growing household type in the UK
- A case on pension rights has made many pension scheme operators reconsider their terms
- Couples should make their own financial arrangements to protect themselves
Understand your pension rights
What exactly are your entitlements if you’re unmarried with kids, and living with the other parent? For example, do you share their pension, or get the same bereavement support? Read our article to find out what you are entitled to and how you can protect yourself financially.
Meanwhile, the total number of children being raised by co-habiting parents has been increasing: it now stands at around two million, or 15% of all the children in the UK.
‘Co-habiting couple families are the fastest growing family type in the UK,’ asserts the ONS, who gathered these figures.
Although the terms ‘common-law wife’ or ‘common-law husband’ are regularly applied to couples who live together, these relationships do not have legal recognition – and that can have a big effect on the family finances.
Denise Brewster was denied payments from the occupational pension of her late partner Lenny McMullan. The couple had lived together for 10 years and even co-owned their home. Mr McMillan had been paying into an occupational pension scheme for 15 years and, had they been married, Ms Brewster would have automatically shared the pension that he had built up.
However, with the pension scheme Mr McMullan had in place, co-habiting partners were only considered eligible for survivor's allowances if they’d been nominated, and Mr McMullan had not completed the necessary form. The form was condemned as ‘unlawful discrimination’ by the Supreme Court because, while married couples did not need to fill it in, unmarried couples did.
Mr McMullan had a public sector pension scheme and, tellingly, the judgement pointed out that nomination forms are less common in private sector schemes.
Many pension providers are now reviewing the way that surviving partners are treated, which would mean that bereaved partners from co-habiting relationships automatically benefit from their partner’s pension rights – this could include a lump sum payment on their death.
In 2014, Siobhan McLaughlin lost her husband to cancer. Because she was neither married nor in a civil partnership she was refused a Widowed Parent’s Allowance, which would have given her £117 a week. With four children to bring up on her own, she decided to take her case to court.
In August 2019, the Supreme Court decided that her human rights had been breached. The ruling has forced the government to look at the way it has treated all of the other people in Siobhan’s situation.
The situation has been complicated further by a decision by the government, which came into force in April 2017, to overhaul the way bereaved parents are assisted – but unmarried couples will still lose out. The Widowed Parent’s Allowance now only applies if your husband, wife or civil partner died before 6 April 2017. If they died on or after 6 April 2017 you may be eligible for a new entitlement called the ‘Bereavement Support Payment’ instead.
While some will receive more money as a result of the change, the fact remains that it is a less generous scheme overall, and many others will end up with less than they would have done under the old system.
More people are choosing to remain unmarried
Fewer people are getting married, but people are still choosing to have children together. According to government statistics, only around half of the UK’s adult population (50.9%) is married, a proportion that has been steadily decreasing for some time – by 3.9% since 2002.Meanwhile, the total number of children being raised by co-habiting parents has been increasing: it now stands at around two million, or 15% of all the children in the UK.
‘Co-habiting couple families are the fastest growing family type in the UK,’ asserts the ONS, who gathered these figures.
Although the terms ‘common-law wife’ or ‘common-law husband’ are regularly applied to couples who live together, these relationships do not have legal recognition – and that can have a big effect on the family finances.
What are your pension rights?
A case on pension rights brought to the Supreme Court in 2018 has raised awareness of how differently a bereaved partner can be treated if they aren’t married or in a civil partnership.Denise Brewster was denied payments from the occupational pension of her late partner Lenny McMullan. The couple had lived together for 10 years and even co-owned their home. Mr McMillan had been paying into an occupational pension scheme for 15 years and, had they been married, Ms Brewster would have automatically shared the pension that he had built up.
However, with the pension scheme Mr McMullan had in place, co-habiting partners were only considered eligible for survivor's allowances if they’d been nominated, and Mr McMullan had not completed the necessary form. The form was condemned as ‘unlawful discrimination’ by the Supreme Court because, while married couples did not need to fill it in, unmarried couples did.
Mr McMullan had a public sector pension scheme and, tellingly, the judgement pointed out that nomination forms are less common in private sector schemes.
Many pension providers are now reviewing the way that surviving partners are treated, which would mean that bereaved partners from co-habiting relationships automatically benefit from their partner’s pension rights – this could include a lump sum payment on their death.
Being unmarried can affect your bereavement support too
Another landmark court case demonstrates how the law can treat unmarried couples with children very differently.In 2014, Siobhan McLaughlin lost her husband to cancer. Because she was neither married nor in a civil partnership she was refused a Widowed Parent’s Allowance, which would have given her £117 a week. With four children to bring up on her own, she decided to take her case to court.
In August 2019, the Supreme Court decided that her human rights had been breached. The ruling has forced the government to look at the way it has treated all of the other people in Siobhan’s situation.
The situation has been complicated further by a decision by the government, which came into force in April 2017, to overhaul the way bereaved parents are assisted – but unmarried couples will still lose out. The Widowed Parent’s Allowance now only applies if your husband, wife or civil partner died before 6 April 2017. If they died on or after 6 April 2017 you may be eligible for a new entitlement called the ‘Bereavement Support Payment’ instead.
While some will receive more money as a result of the change, the fact remains that it is a less generous scheme overall, and many others will end up with less than they would have done under the old system.
What are the new rules?
Widows and widowers with children will now receive an initial lump sum of £3,500, (those without children receive £2,500). This is followed by 18 monthly payments of £350 for those with children (£100 for those without). That makes the maximum available under the new scheme £9,800 [1].
But this doesn’t apply to unmarried couples – only to husbands, wives and civil partners who have been bereaved – except in Scotland, for couples who can prove they were co-habiting before 4 May 2006.
According to Alison Penny, the director of the Childhood Bereavement Network: ‘Over 2,000 families like Siobhan’s face the double hit of one parent dying and the other parent realising that they and the children are not eligible for bereavement benefits.
‘While the Widowed Parent’s Allowance was replaced in April 2017 with the Bereavement Support Payment, co-habiting parents are still ineligible for this new benefit. Each day that parliament delays, another five grieving parents and their children will fall foul of this injustice.’
Making sure you are covered
For all its joys, raising a child is an expensive business, making it critical that you know precisely what income you can count on should your partner pass away or be unable to work.
In terms of pensions, while changes may be on the way, the received wisdom from pensions advisers is to make sure that you are the nominated payee. Bear in mind that, in some cases, a partner may still have a former spouse down as their nominated person.
Not all pension schemes include life cover either, so it’s a good idea for every couple to look at the small print of what financial cover they have in place in the immediate aftermath of losing a partner.
Sources
[1] AgeUK, 2019. Bereavement Support Payment, https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/bereavement-benefits/
