04 February 2016
Cohabiting couples ‘missing out on £82m’
Unmarried couples living under the same roof are missing out on millions of pounds worth of bereavement benefits, according to a pensions company.
Royal London claims cohabiting couples who have not tied the knot are collectively losing £82 million a year due to outdated rules.
It says the National Insurance system "ignores" unmarried couples living together, not treating them the same way as people who are married.
Six million people in the UK are now cohabiting, it says, at risk of the "living together penalty".
The research estimates that cohabiting couples collectively lose £15 million a year in bereavement payments.
They also lose £11 million in bereavement allowance and a further £56 million in widowed parent's allowance.
It adds up to a total annual loss of £82 million, which Royal London says would have been paid to people whose partners had died if they had been married.
The report states that other parts of the benefit system do take account of cohabitation, but only to reduce people's entitlements.
Claire Filer, senior associate in the family law practice at B P Collins comments: "Unfortunately this is not a new issue and it has long been a concern that those couples who chose to live together rather than marry, are not treated in the same way as a spouse, when their partner dies. This is perhaps exacerbated by more couples choosing to cohabit.
"Those who are worried about the potential financial downsides to cohabitation should however think carefully about tying the knot, and seek independent legal advice about the financial implications of marriage, considering a prenuptial agreement. This also highlights the issue of reforming the law to better protect those who chose to cohabit which is something which family lawyers continue to call for."