Funeral costs set to rise
After decades of the number of deaths in the UK falling, 2015 will mark a “tipping point” where the historic trend starts to reverse: as the oldest of the babyboomer generation move through their later years deaths are predicted to rise by 20%.
This trend reversal will have significant implications for current forecasts of funeral costs and highlights a growing need for families to broach the delicate subject of end of life expenses.
The findings form part of a new report commissioned by mutual, OneFamily, which incorporates Family Investments and Engage Mutual, and undertaken by the International Longevity Centre – UK (ILC-UK).
The report, “The funeral time bomb”, will be available from April 20 and reveals:
Funeral costs are already soaring in the UK with the cost of a simple funeral increasing by 80% between 2004 and 2014.
With deaths predicted to rise, increasing pressure on funeral services is likely to push prices even higher: ILC-UK predicts that funeral costs could reach or exceed £7,000 by 2020, with the cost of a simple funeral projected to rise to £5,226 by 2020.
Aggregate spending on funerals in the UK could rise to £3.7bn by 2020 (up from £2.8 bn. in 2014).
Funeral debt (where money has been borrowed to cover the cost of a funeral) in the UK could reach a quarter of a billion in less than 20 years
The report highlights a growing need for families to come together and plan ahead for funeral expenses. It reveals that an estimated 109,000 UK adults incurred funeral debt in 2013 with the average standing at £1,305 per person.
In total, funeral debts incurred during 2013 equated to £142m and the ILC-UK calculates that based on current trends, the total UK funeral debt could reach a quarter of a billion by the mid-2030s: an increase of 76%.
The figures could have a significant impact on families who are already under financial pressure. At present, 14.5 million families would not be able to pay for a funeral at short notice unless the deceased had taken out some form of funeral provision, such as life cover, to help towards the costs.
Baroness Sally Greengross, Chief Executive of ILC-UK, said: “More than half of UK households have less than £3,000 in savings and many will struggle to cover funeral costs. We all need to talk more about dying and ensure we are prepared for the inevitable. State support for funerals is complex and inadequate and without reforms will contribute to more people falling victim to funeral debt.”
Simon Markey, CEO of mutual OneFamily, which helps around 1 in 12 of all UK families to support one another financially, said: “Our own research shows us that families are coming together more and more to help one another financially. Nearly half of UK adults (48%) who have provided family members with assistance have done so to help them to cover day to day expenses. This report reveals a need for families to look to the future too.
“While the subject of end of life expenses can be a very delicate one to discuss, the findings highlight how starting this conversation could help avoid leaving loved ones with unexpected debts they may find difficult to manage,” he continued.
More than one in four (22%) of those who have arranged a funeral in the past five years had to do it without financial provision having been made by the deceased. Government Funeral Payments have not kept up with rises in funeral costs and in 2012 the average amount awarded represented just 37% of the costs of a simple funeral
The report argues that borrowing costs are unaffordable for many and that there is an urgent need for more support and greater pre-planning.