Incentivised Funeral Savings Scheme pilot: qualitative research - full report

Conclusions and recommendations

Conclusions

Most research participants had made limited financial provision for their funeral, although some had assets which could be used to fund their funeral. As a consequence of the focus group discussion, most of those in a finanical position to save for their funeral felt motivated to do so.

Participants viewed the IFSS proposed positively and were initially enthused. However, this enthusiasm was based on their assumption that the government contribution would match participant savings (or match participant savings at a level of 10%, 25% or 50%).

The proposed limit on government contributions (£120, £250 and £400) were not perceived to be an adequate incentive to encourage participants to save for their funeral.

In addition, there were concerns about the proposed eligibility criteria (such as restricting the scheme to those over 40 years old and without existing financial provisions for their funeral). As a result, few participants felt the proposed IFSS would be a suitable product:

• Those on moderate incomes, but also some on lower incomes, suspected they would be ineligible because they had a pension, life insurance policy or funeral plan
• Those struggling on a low income feared they would be unable to participate because they would not be able to afford to save into the scheme.

Participants did, however, view credit unions positively and as a credible delivery partner, despite not being members and having limited knowledge of them.

Recommendations

A small set of recommendations are set out below. These are in four groups. The first are general; the second relates to developing the IFSS as currently formulated; the third relates to the intended delivery partners and the fourth relates to developing an alternative approach that emerged from the discussions with participants.

General: encouraging and enabling funeral savings

Increase awareness of funeral costs, and of savings and insurance options, so that people are encouraged and motivated to make provision for their funeral costs.

Facilitate improved information and advice about the wide range of private sector options, to enable those who are able to afford independent provision to make adequate provision with confidence.

Support or initiate measures in Scotland to contain growth in funeral costs, (and where possible reverse this growth), and improve transparency around the costs of funeral services and plans.

IFSS: reducing barriers to entry and increasing incentives

Modify the proposed IFSS to reduce barriers to participation by reconsidering the age restriction, reconsidering the restriction on existing funeral provision, accommodating small regular savings, and introducing provisions to ring-fence savers’ contributions, except for specified emergencies.

Respond to negative perceptions of the government contribution by increasing it, targetting it, or developing an alternative presentation of the government incentive. One example could be in the form of a one-off or annual payment after sustained savings or stipulated level of savings, up to a final cap.

Delivery partners: credit unions

Assess the need and demand for credit unions in areas currently without access (more than 20 miles from a credit union, for instance).

An alternative approach: an insurance model

While it is noted that powers relating to National Insurance contributions are reserved to the UK Government, participants did suggest an alternative scheme based along an insurance model. Such a scheme was popular because it encompassed the following features:

• Entry into the scheme would be compulsory once economically active
• Payments would be taken directly from income source with contributions from the government for those in specific circumstances (such as unemployment)
• The personal contribution required would be small across a long period of time
• The payment would cover key costs such as death certificates, mortuary expenses and burial or crematorium fees with the individual or family covering additional expenses such as refreshments or flowers