Cost of Dying 2014 The 8th Annual Report

Cost of Dying Report 2014 #costofdying HOME2

SunLife Press Team

Visit: www.sunlifedirect.co.uk/press-office

Email: nicola.pugh@axawealth.co.uk

Tel: 01256 852041 or 07795 044915

Address: SunLife, PO Box 446, Bristol BS99 1DR

Follow us on Twitter @sunlifeuk #costofdying

Like us on Facebook facebook.com/SunLifeUK

Watch our videos youtube.com/user/SunLifeDirect

Cost of Dying Report 2014 #costofdying HOME3

Foreword 4

About the report 5

Changes to the cost of dying 6

Changes to the average cost of a basic funeral 7

How the cost of a basic funeral adds up 8

Regional variation in the average cost of a basic funeral 9

Changes in amount spent on discretionary funeral costs 10

Finding the money to pay for funeral costs 11

Changes in the average amount spent on estate administration 12

DIY estate administration 13

Lessons learned 14

Contents

Cost of Dying Report 2014 #costofdying HOME4

So it’s no surprise that funeral poverty continues to grow too. With the total cost of dying averaging £8,427 across the UK, more and more families are struggling to pay the bills that mount up when someone passes away.

And it’s from this first theme of spiralling costs that the second theme emerges: the emotional cost of dying. With hidden costs that families didn’t make provision for and the inconsistent manner in which different companies can treat the bereaved when sorting out their loved ones’ affairs, many people are bearing a huge emotional burden.

Inevitably, this burden comes at exactly the same time people are trying to come to terms with their loss. The last thing they want is bureaucratic or bungling treatment when they are trying to tidy up their loved ones’ affairs and plan the send-off.

We’ve spoken with a number of people to find out how rising prices and hidden costs have added to the distress they’ve faced, and in this report we take a closer look at the various fees which together make up the total cost of dying.

But there is a third, brighter theme. And that’s the continued shift to treating funerals as a celebration of a loved one’s life, rather than a mourning of their passing. Funerals where no-one wears black and which have become positive family events, where people feel able to smile and even laugh.

So. This year’s Cost of Dying gives a clear and unambiguous picture of what it is like to die in Britain in 2014.

It is a difficult topic which many of us find it hard to talk about, for all sorts of reasons. But as the report illustrates, talking about our passing, and making some provision, will benefit those left behind.

If this report leads to more of us sharing our last wishes sooner, and perhaps having those difficult conversations, then so much the better.

ForewordDavid Brooks, Marketing Director, SunLife

“ All our research shows that planning, however small, really helps and we urge families to break the taboo of talking about death and share their wishes.”

In our 8th annual Cost of Dying report, three powerful themes emerge. Not least the revelation that in the last year, the cost of dying has risen seven times faster than the cost of living.

Cost of Dying Report 2014 #costofdying HOME5

This year’s report will look at trends in funeral costs before investigating the ways in which pre-planning benefits those who eventually go on to take on the role of organising the funeral and administering the estate.

About the report

The cost of dying information was established using two research methods:

An online survey of 1,504 UK adults who were responsible for planning a funeral and administering an estate within the last four years.

118 telephone interviews of Funeral Directors from across the ten UK regions.

Methodology

SunLife’s Cost of Dying report is a well-established study which tracks changes in funeral costs over time. In carrying on the comparability of information across reports, the current research maintains the data set which was established in 2007. It is widely recognised sector-leading research and provides a credible and complete view of funeral costs.

Supporting these, we commissioned a further qualitative study to explore the experiences of 30 individuals who had arranged a funeral or administered an estate. Participants were recruited from the online survey and interviews, lasting 90 minutes on average, were recorded and transcribed verbatim so themes could be identified. Direct quotes have been used throughout the report.

We are most grateful to participants for their time and cooperation and to YouGov for conducting this research on our behalf.

Cost of Dying Report 2014 #costofdying HOME6

Changes to the cost of dying

Changes to the Cost of Dying 2007-2014

Cost

of D

ying

£

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

£7,000

Year 2007 2008 2009 2010 2011 2012 2013 2014

£8,000

£9,000

£6,036

£8,427

£6,698£7,098

£6,812

£7,248 £7,114£7,622

+11.0

%

+6.0

%

-4.0

%

+6.4

%

-1.8

%

+7.1%

+10.

6%How the cost of dying adds up

Includes the fees for the funeral director, the cremation or burial, the doctor, and the minister or celebrant.

+ £8,427+ =

Average cost of a basic funeral

Includes the memorial, death and funeral notices, flowers, order sheets, limousines, the venue and catering for the wake.

Average amount spent on additional extras

e.g. a solicitor to administer the estate.

Average amount spent on hiring a professional

Assuming the services shown are used.

THE TOTAL COST OF DYING

£3,590

£1,833

£3,004

£3,590

£1,833

£3,004

£3,590

£1,833

£3,004

Cost of Dying Report 2014 #costofdying HOME7

Changes to the average cost of a basic funeral

Fune

ral C

ost £

£500

£1,000

£1,500

£2,000

£2,500

£3,000

£3,500

Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017* 2018* 2019*

£4,000

£4,500

Changes to the average cost of a basic funeral 2004-2019*

*This is just a prediction, funeral costs may rise by more or less than this. Based on a straight line prediction from observed funeral costs from 2004 – 2014.

£5,000

The average cost of a basic funeral

in 2014 is

£3,590

In 2014, the average cost of a basic funeral is £3,590.

Supposing funeral costs continue to rise at the same rate as we have seen over the last 10 years, the average funeral will cost £4,489 by 2019.

Cost of Dying Report 2014 #costofdying HOME8

Funeral director’s fees

Funeral director’s fees (which often cover the cost of the coffin, hearse, care of the deceased plus the funeral director’s professional guidance) have risen over the last 12 months. Increasing competition, bad debt, a difficult investment environment, and increasing overhead costs have all played a part. During interviews, many participants described how much they valued the guidance and expertise of their funeral director:

Cremation and burial fees

The second largest cost is the cost of the cremation or burial. In 2014, the average burial fee is £1,746 - only 0.5% up on last year. The average UK cremation fee, however, is £662, which represents a 6.1% increase on last year. Crematoria are largely run by Local Authorities and it’s possible that, following central government budget cuts, they are looking to crematoria as a source of ready income. Also many crematoria have introduced an environmental surcharge designed to help meet the high cost of installing filtrations equipment in order to meet with environmental legislation. The cremation movement has estimated that compliance with legislation will cost approximately £45 per cremation, which can represent a 7-10% increase in the cremation fee.

How the cost of a basic funeral adds up

Doctor’s fees

After a fairly consistent five years, doctor’s fees for certification have increased 1.9%. Changes to the death certification process came into effect in April 2014 and GPs no longer complete the paperwork – responsibility has now moved to Local Authority-run medical examiner services.

Minister’s fees

The average fee paid for a religious or secular service has increased this year from £133 in 2013 to £141 in 2014. In the UK, only the Church of England specifies a fee (£164 for a service at a crematorium in 2014). Other religious institutions recommend a donation.

“ It’s handy because there are things which otherwise you’d never have thought of…there were some things that surprised me, such as, a cardboard coffin is actually more expensive that a wooden one…it was like, ‘Oh, a Ford’s cheaper than a Ferrari’.” Nigel, 54

The cost of a basic funeral is calculated by adding together the following fees:

£3,590

£1,833

£3,004

Basic funeral costs account for 43% of the total Cost of Dying

Cost of Dying Report 2014 #costofdying HOME9

Regional variation in the average cost of a basic funeral

£3,490

As might be expected, there are significant regional variations in funeral costs. Predictably, London remains the most expensive place to die, with the average funeral costing £4,836, which is 34.7% higher than the national average of £3,590. At the other end of the spectrum, average costs are significantly lower in North West England at £3,028, which is 15.7% lower than the national average.

£3,058

£3,466

£3,028

£3,527

£3,456£3,523

£3,704

£3,883 £4,836

Cost of Dying Report 2014 #costofdying HOME10

Changes in amount spent on discretionary funeral costs

The stand-out ‘additional’ cost (accounting for 42% of the total) is still the cost of the memorial, however the average spend on this has decreased from £864 in 2013 to £772 in 2014. The decrease in the overall amount spent on additional costs is an understandable response to recessionary pressures, but there are signs that cultural trends are also contributing to the change in behaviour.

The amount spent on funeral notices, for example, has continued to decline and the average amount spent (£66) is now less than half the amount spent in 2007 (£146). Traditionally, funeral announcements are found in the obituaries section of a newspaper, but nowadays it is becoming more acceptable to announce the funeral online and it is no longer unusual to see people announcing a funeral or paying condolences via Facebook.

In 2014, the average amount spent on additional costs was £1,833, £173 less than in 2013. Being discretionary, this amount tends to fluctuate, and, over the last eight years, people have spent on average £1,955 on additional funeral-related costs.

Year 2007 2008 2009 2010 2011 2012 2013 2014

Average Discretionary Costs £2,027 £2,097 £2,156 £1,745 £1,864 £1,923 £2,006 £1,833

THE EXTRAS CAN ALL ADD UP

LIMO HIRE (extra limos) £227

FLOWERS £150

FUNERAL NOTICE £66

DEATH NOTICE £77

MEMORIAL £772

ORDER SHEETS £59

CATERING £373

VENUE HIRE £109

TOTAL £1,833

Total of average costs of typical funeral related services, assuming all services

are used. “YouGov, July 2014.”

£3,590

£1,833

£3,004

Cost of Dying Report 2014 #costofdying HOME11

On the flipside, a consequence of 42% of people failing to make specific provisions is the number struggling to meet funeral costs. This year, one in seven respondents reported that the cost of the funeral they arranged had caused them notable financial concerns, with an average shortfall of around £2,371.

Finding the money to pay for funeral costs

“ ...it was pre-paid and pre-organised. I think if it hadn’t been, I’d be thinking, ‘What would Dad have wanted? Should I do it this way? Should I do it that way?’ So it was, yes, very straightforward. Also, the other thing, I suppose, is not worrying about the expense ...funerals can be very, very expensive, so not having the worry of that financial burden.” Sally, 51

This year, our survey found that 57% of people had made specific financial provisions to pay for their funeral before they died. In 24% of cases, the deceased had bought a pre-paid funeral plan. During interviews, one participant described how she had benefitted from the deceased putting such a plan in place:

“ I knew my mum would lend it to us….if she hadn’t…we would have taken out a loan, a short term loan, which would have cost more, but you want the burial. You know you’ve got to pay it.” Maureen, 58

For this group, covering the cost of a funeral required some sacrifice. In most cases, costs were met through savings, but with a third of the UK population having savings of £250 or less,* it is no surprise to learn that in 47% of cases, credit cards or loans from banks and family members were used:

*HSBC Research 13th November 2013.

Cost of Dying Report 2014 #costofdying HOME12

48% of the 1,504 people questioned used a professional to help them administer the estate, and the vast majority of those appointed a solicitor. The average amount spent was £3,004 and despite the costs, nearly two-thirds (63%) said the cost was in line with their expectations, if not a little less.

Estate administration fees are often calculated by applying a fixed percentage to the estate value. With the house being the largest asset in the estate for most people, increases in average house prices translate to increased estate administration costs, and that appears to be the case this year. In the 12 months to July 2014, average house prices rose by 10.6%.*

During the qualitative study, those who chose to work with a professional to administer the estate spoke about how the complexity of the estate had a bearing on their decision. One participant, named executor of an estate involving significant debts, chose to work with a solicitor for the sense of protection it offered, another based his decision on the time he would save:

Changes in the average amount spent on estate administrationAppointing a professional to administer the estate

“ I thought I would rather pay a professional to do it because actually my time is actually more valuable than my money. So the time that would be involved and the time learning how to do it and time checking I was doing it right, was actually a lot more value to me than paying a fee to a professional who was very experienced and could do it a lot quicker.” John, 68

*Nationwide House Price Index July 2014.

£3,590

£1,833

£3,004

Cost of Dying Report 2014 #costofdying HOME13

For some, the time and effort involved in estate administration was significant. As one participant put it, “If I’d have charged somebody a fair hourly rate for the amount of work that I put in …it’s a lot of hours.” Another spoke of how he kept a book to remind himself of what he’d done to ensure he ‘kept on his toes’.

DIY estate administration

“ different people did different things...we actually played to our strengths. I’m quite good at filling in forms and papers and stuff like that... the girls did a lot of fetching and carrying and running off to different places.” Sara, 58

The number of people choosing to administer the estate themselves increased in 2014. Just 39% of those questioned administered estates themselves in 2013, but in 2014 52% decided to go it alone. Saving money was a key motivation but there were other factors that influenced the decision. Some felt it was their duty as the eldest child and others spoke of family members playing to their strengths:

“ ...it makes you get on with it, because you can’t just be in a puddle somewhere...keeps you focussed on getting up in the morning, getting on with things, or it postpones the grieving process ...I don’t know whether it’s a good or bad thing… but I think for me it was useful, pragmatic, practical, getting on with things.” Hester, 70

On the whole, most of those who took responsibility for the administration had a good idea of what was expected of them and how complicated it was going to be and some spoke of how the tasks involved helped delay the grieving process; the routine nature of the work acting as a form of distraction:

Cost of Dying Report 2014 #costofdying HOME14

A key finding of the qualitative study was that pre-arrangement was enormously beneficial in helping to manage expectations. At the end of each interview we asked each participant about the lessons they had learned from arranging a funeral and administering an estate for their loved ones.

For those who had known the deceased’s wishes beforehand and had a good idea what to expect, it was clear that it had helped them enormously. One participant described being able to follow a set of wishes as a ‘comfort’ and another described how it allowed things to fall into place ‘without having to think too much’ about them. But it was Mary who summed it up best:

Lessons learned

“ if you don’t make preparations, it makes it so much harder for the people left behind that have to make those decisions for you, because they don’t know... Whereas if somebody left you instructions, and you follow those instructions, then you know that it’s the last thing you can do for that person, to honour their wishes. That’s the very last thing you can do.” Mary, 61

As I mentioned in the introduction, a number of striking themes emerge from the 2014 Cost of Dying. And one of the most significant is the growing emotional burden caused by the spiralling costs associated with a loved one’s passing.

We now know that basic funeral inflation has risen for eleven years in a row with no signs of stopping. As more people struggle with funeral bills, this report shows how some bereaved families are exploring cost-saving ways to administer the estate themselves.

Our case studies have shown things can be made a lot easier on those left behind when people make known their final wishes – whether it’s the type of service, the memorial, or even just the music. Factoring in the financial considerations of all this, can further reduce the emotional cost on those left behind.

Conclusion

It’s also clear that we need to do more, as a society, to create a fairer, easier, more consistent experience for everyone who is bereaved and suddenly beset by paperwork, unexpected bills and difficult conversations.

In 2014 we might be shocked to see how the emotional cost of dying for people who’ve recently lost someone can be made worse by the companies they contact.

We should be doing more to create a more straightforward, consistent experience across the UK, and we should be much more transparent about all of the associated costs. Perhaps this report will help.

David Brooks Marketing Director, SunLife

AXA Wealth Services Ltd distributes financial products and services and trades as SunLife. AXA Wealth Services Ltd is a company limited by shares and the registered office is at 5 Old Broad Street, London EC2N 1AD (registered in England, no. 02238458). AXA Wealth Services Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 465753). © 2014 AXA Wealth Services Ltd, trading as SunLife.