Today, July 1, 2019, plans will be finalized in Parliament that will deliver the government’s promise of providing financial support to English families who have lost a child to death.  “The Children’s Funeral Fund for England will be established to ensure no parent will have to pay for their child’s burial or cremation” states the opening sentence in this article from Gov.UK.

According to the article, an estimated 3,800 children die under the age of 18 in England annually and the Children’s Funeral Fund will provide bereaved parents with practical support at this time where, regardless of income, families will receive financial help.  Again, according to the article, last year Prime Minister Theresa May promised to abolish children’s burial and cremation fees.

Rules for the financial payments to the families include that the deceased must be under 18 years of age at the time of death or is stillborn after the 24th week of pregnancy and that the burial or cremation takes place in England.  The payment, as mentioned above, is not means tested, and the residency or nationality of the deceased child, or the person organizing the burial or cremation, will not be relevant in determining eligibility.

Funeral Director Daily take:  Those of us who have been on the front lines of funeral service know how hard it can be for parents, following the death of a child, to memorialize their child in a way that is meaningful to them while also carrying on with their financial commitments of life in general.  However, my opinion is that I am not quite sure if this option of the government paying for these services is the best available method to solve the problem.

This article and thought process made me think of the Social Security Lump Sum Death Benefit (LSDB) of $255 in the United States and its history.  You can read about that development and history here.

Turns out that with the Social Security Act of 1935 the LSDB was not meant to be a “burial benefit”.  It was meant to be a death benefit as a way to equal out some payments for those who died before starting  monthly benefits at age 65.  So, originally, the LSDB was paid out only to survivors who lost a loved one prior to age 65.  The death benefit, similar to insurance, was figured at 3.5% of the amount that the decedent had paid Social Security taxes on.   Remember, however, the maximum amount of wages that you could pay Social Security taxes in the years prior to 1940 was $3,000.  So, as originally devised, someone who had paid for 5 years – (5 x $3000 = $15,000) and died before turning 65 would generate a death benefit (like insurance) to the survivor of $525 ($15,000 x 3.5%).

In 1940, I’m guessing that $525 would have been enough to pay for the funeral expenses.  If you click on the above mentioned history of the LSDB you will notice that the payment system changed from that insurance type of amount to a flat $255 over the years.  Amendments came in 1939 which changed the LSDB to 6 times the monthly benefit and was counted on as a burial benefit.  Amendments also came in 1950, and the $255 amount came in the 1954 amendment.  The last change was in 1981.

So, just for fun, I tried to figure out what my LSDB would be under the original 1935 Social Security Act.  So, I am 61 years old and if I died before 65 when I could start receiving monthly benefits here’s how I figured this.  Let’s just say that I reached the maximum payment on Social Security taxes each year (something I didn’t do early in my career) . . . .today that is $132,900 as compared to the $3,000 in 1935. . . but I’m guess-timating that over my 35 years of work that number might have averaged about $80,000.

If I paid on wages of $80,000 for 35 years, I would have paid Social Security taxes on lifetime wages of $2.8 million.  The original 1935 Social Security Act would have paid a one-time death benefit to my survivors (if I died before age 65) of $98,000 ($2.8 million x 3.5%).

It is interesting to see how things have changed over time and how politics always enters into the equation.  I suppose time will tell if this humanitarian gesture in England will be a success or a boondoggle.

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