Regular readers of this blog will know how often we highlight the myth of the “common law marriage” and the lack of legal rights for couples who live together.
There is no financial security for cohabiting couples – and that includes the right to inherit a partner’s pension should he or she die. However, a law progressing through Parliament, which would allow opposite sex couples to enter into civil partnerships, could give unmarried couples new pension rights.
A recent article in the Financial Times (FT) reports that 3m cohabiting couples could benefit from the changes now being considered by MPs. Currently couples who are not married, or who not in a same sex civil partnership, have no automatic right to inherit pensions from his or her partner.
Speaking to the FT, Sir Steve Webb, director of policy at mutual insurer Royal London, comments: “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. This reform is long overdue and would stop these couples being treated by the state as second-class citizens.”
A law change to allow heterosexual couples the right to enter into civil partnerships, could allow them to benefit from “defined benefit” workplace pension rights. Defined benefit pensions allow provision to pay a surviving widow or widower where a couple were married, or registered as civil partners.
Another financial expert, Kay Ingram, director of individual savings and investments at LEBC financial advisers, told the FT that anyone cohabiting should check out their pension scheme rules regarding cohabitants as potential recipients of a dependant’s pension.
The number of cohabiting couples has almost doubled in the past 20 years from around 1.7m in 1997 to 3.3m last year, and continues to rise steadily. As well as being financial vulnerable should their relationship fail, cohabiting couples are at a disadvantage if a partner dies. As well as no automatic entitlement to pensions, they have no legal right to inherit property or assets if their deceased partner did not have a will. Worryingly the majority of cohabiting couples do not have a will. Figures from new research from Direct Line Life Insurance reveal that just 26 per cent of cohabiting partners have a will, compared with 52 per cent of married couples.
Until we have a change in the law I would urge cohabiting couples to take steps to protect their financial interests:
Speak to a specialist family law solicitor to draw up a cohabitation agreement that sets out individual and joint assets, including savings and property, and how these wil be shared in the event of the relationship breaking up.
Make a will – otherwise a surviving partner will inherit nothing.
Take out life insurance – this will help to cover any outgoings and debts.
If you have any questions about cohabitation, or any matter relating to family law, you can email Wayne firstname.lastname@example.org, or him call 0191 406 5002. You can follow Wayne on Twitter at @waynelynn and Silk on @silkfamilylaw