The UK’s reluctance to save for the future leaves families facing funding gap for funerals

Sadly, we will all die one day. Yet very few people in the UK put any plans in place for their funeral, no matter how simple their wishes might be. A result of this reluctance to plan ahead for the inevitable, as Royal London’s Funeral Cost Index has revealed today (19 October 2016), is that an increasing number of people are having to borrow money to pay for a funeral, despite the fact that funeral firms are holding, and in some cases reducing, their prices.

Says Mandie Lavin, Chief Executive Officer of the National Association of Funeral Directors: “It was concerning to discover recently, from the Money Advice Service, that more than 40% of working age Britons have less than £100 in savings to cover any unexpected expense in life, let alone a funeral1 – Britons have stopped putting aside money for a ‘rainy day’. The propensity to save was not necessarily related to income levels with a greater proportion (23%) of those surveyed who earned £13,500 or less having £1,000 or more saved.

“Equally worrying was news from research by YouGov2 which revealed that, for almost one in five British adults, there was absolutely nothing that would prompt them to think ahead to their own funeral.

“Even the simplest, direct cremation would still incur the standard council cremation fee (UK average £700), doctors’ fees (£164) and the cost of both a coffin and the collection and transfer of the body to the crematorium. This means that with millions of Britons, even those on larger incomes3, having less than £100 in the bank it’s clear that a significant proportion of British adults will find themselves having to borrow money in the future to cover the costs of a funeral of a loved one.

“It is, therefore, perhaps no surprise that increasing numbers of people are putting the cost of a funeral on a credit card, using their overdraft or taking out a loan. Arguably it’s no different to what we do for many other expenses in life – from sofas and holidays to buying a new boiler – sometimes even if we do have savings; so why not funerals?

“It’s also important to note that a significant number within the 15% of people in Royal London’s figures that said they did not have savings to cover the cost of a funeral, is the 10-12% of Britons on the lowest incomes for whom any unplanned expense in life is simply beyond their means. Sadly, the Government’s existing bereavement benefit, the Social Fund funeral payment, is failing to support those who need it most with an overly complex application process, less than 50% success rate for applicants and a payment to cover the funeral costs that has remained unchanged, at £700, for more than thirteen years.”

Whilst planning a funeral now may be the last thing that people want to be thinking about, when the inevitable happens it can help to ease the emotional and financial strain on friends, family and loved ones at a very difficult time. The National Association of Funeral Directors believes that planning ahead is essential – whether that is an informal conversation with those close, setting aside some savings or taking out a funeral plan. Planning ahead not only addresses how the funeral will be paid for but can also remove some of the uncertainty and distress for families in knowing that they are arranging the funeral that their loved one would have wanted.

Notes:

  1. A survey by the Money Advice Service in September 2016 revealed that 16.8 million working age Britons had less than £100 in savings to cover unforeseen expenses and 71% of those surveyed experienced at least one unforeseen expense a year.
  2. Taken from findings from Funerals Matter 2016 – research undertaken by YouGov on behalf of the National Association of Funeral Directors and Cruse Bereavement Care.
  3. The Money Advice Service survey also showed that size of income was not necessarily an indicator of likeliness to save, with 23% of those surveyed who earn £13,500 or less having £1,000 or more saved.