Cohabitees could see surge in pensions benefits
New legislation could mean cohabitees see a significant rise in the financial benefits that they’re entitled to.
This is according to Royal London in relation to the potential introduction of civil partnerships for heterosexual couples. The bill which would legalise this is currently being considered by MPs.
Currently there a number of tax and benefit advantages which are only available to those who are married or in same-sex civil partnerships. However, if opposite sex couples were also able to have civil partnerships, this would mean a whole new group of people would be entitled to these benefits, which may include:
– tax allowances
– bereavement benefits for those of working age
– the estate passing to the surviving partner
– widow or widower in an occupational pension scheme to be seen as a civil partner
One particular change the new legislation may bring could largely affect pensioners.
Many within this demographic fall under the old pension system, as in the one introduced prior to April 2016. Whilst this entitled someone to an improved state pension after a spouse had died, the same could not be said for cohabiting couples.
If the law was to change, it’s likely that cohabitees would register for a civil partnership in order to benefit from these rights, potentially boosting income by an estimate £2,500 per year.
Commenting on the potential impact of the legislation being implemented was Steve Webb. The Director of Policy at Royal London stated:
“Millions of couples who live together could potentially benefit to the tune of several billion pounds if they were able to register a civil partnership. The biggest areas where they could gain include new rights under company pension schemes, access to income tax breaks for couples and entitlement to bereavement benefits. But some could also see large gains from inheritance tax advantages currently restricted to married couples and same sex civil partners. This reform is long overdue and would stop these couples being treated by the state as second class citizens”