There’s a wide and growing measure of agreement that the next big scandal to hit the funeral industry is going to centre on pre-need funeral plans.
On the one hand, there is intensifying anxiety concerning the robustness of trust funds. There are dark and disturbing rumours flying around about plans coming in underfunded.
On the other hand, there are rising fears of greedy or desperate small funeral directors pocketing money paid to them by clients for funeral plans. In America, scarcely a week goes by without some wretched undertaker or other being dragged off to court to answer a charge of embezzlement.
With the Ponzi word being murmured ever more loudly, it’s no surprise to see one funeral plan provider seeking to gain a competitive advantage among undertakers by playing on fear:
With increasing focus on the financial security of pre-payment funds, you may feel that now is the time to find out more about how your current provider operates. For example, do you know what guarantees are in place … you may be aware that the Actuarial Profession has set up a Working Party to review the prudential regulation of funeral trusts…
For consumers, a funeral plan’s attractions obscure its inadequacies. It gift-wraps money in a way no other financial product can. It’s an easy sell — which is why Age UK can get away with flogging pricey Dignity plans to its less well-off clients.
It’d be interesting to know how many financial advisers have bought a funeral plan. And yes, how many of you undertakers and celebrants out there have bought one, eh? Come on, hands up.
In the present climate Golden Charter has been dissed more than most. The perception is that it has grown increasingly aggressive in its selling methods to both undertakers and the public; that it is overheating and riding for a fall. There are some who mutter that Golden Charter is a hubristic bubble business.
Unverifiable smears and rumours, exacerbated by industry factionalism, muddy the waters. They create fear and despondency; they are unfair. But they also serve their purpose. They intensify scrutiny; they compel plan providers to exert themselves to demonstrate their viability. They stimulate openness.
So it is valuable to be able to publish the following communiqué from Golden Charter to its member funeral directors:
As we are all aware, the funeral planning industry is founded on trust and confidence. We need the public to have total faith in the certainty that the money which they have laid down is secure and will provide the benefits that they have been promised when the time comes.
Equally important in this equation is for the funeral director to know that the money secured in an insurance policy or Trust will be there when required and will produce a meaningfully relevant sum which will enable their services to be carried out profitably and in full.
In recent years, inflationary growth has been low and has been considerably outstripped by funeral cost inflation. The wider economic picture is no different where wage growth has struggled to match inflation. This issue is one of the reasons why Golden Charter has grown a legal services business, providing a way of generating profits which can be added to the maturity values of our contributing funeral director’s plans. We will be making a further annual distribution of this surplus very shortly and, while this helps to address potential shortfalls, it is only useful if the underlying funding arrangements remain completely secure.
The ramifications of the banking crisis continue to rumble on and the financial regulators remain the recipients of much criticism, currently over the appointment of the former Chairman of Co-operative Bank. As a result, public confidence in finance companies remains fragile. With the media screaming about a multi-billion pound black hole in the Co-op Group’s balance sheet, it would be surprising if some plan holders weren’t concerned and that anxiety may also spread to holders of other plans.
To avoid any possible doubts arising in the minds of our plan holders and your customers, Golden Charter will make a series of announcements about the strength of the Golden Charter Trust. The details will emerge following next week’s SAIFCharter EGM as it is only proper that we inform our owners first. We can, however, announce today that the Trust currently holds more assets than it requires to fully meet all of its forecast liabilities and, furthermore, it is in its strongest position ever. That calm progress through the financial storm has been achieved by following a cautious investment policy and adding prudent levels of growth on plans. Reassuringly, the Trust remains a firm foundation for all of your plan holders.
More detailed figures will be released around the end of this month and any plan holders seeking more information about the Golden Charter Trust can be guided to the Trust’s website at www.goldenchartertrust.co.uk.
funeral plans are awful for families and funeral directors alike. you basically pay over the odds now for a funeral later with no guarantee that the full cost will be covered.
I always try to talk families out of taking them out, but many insist it is what they want to do.
the only people doing well out of them are dignity/co-op because of the numbers involved and the funeral plan company, who don’t actually have provide any real service. Oh, sorry, they help you to organise a bowls event and give you some stickers for your window…
…”that the Trust currently holds more assets than it requires to fully meet all of its forecast liabilities”…. FORECAST. Whilst certainly not “having a go” at Golden Charter, I ponder the absolute meaning in which the word is being used in this context.
Does it mean within a certain time scale, say 36 months, or is it refering to the total responsibilities of meeting all it’s plan values… or what?
Anyone able to help me out?
IMHO the really wrong situation is people going to age uk, assuming that they are being advised in the best interests of the elderly, and being sold hugely expensive plans, tied in to selected ie dignity funeral directors and the plans not even covering a full funeral.
I have not and would not ever ask anyone to pay a penny more because the plan value doesn’t cover what they paid for at the time – surely that’s the whole point of someone taking out a plan – they shouldn’t have to worry about the prices going up! peace of mind – really??
Now hold on a minute ……. if funeral costs are rising at between 5 and 7% pa and savings interest between 2-3%, a funeral plan is a sensible way of paying for what is an inevitable expense. If cremation or other disbursement cost exceed RPI, why should a family not be asked to cover this, if it was made clear at the time the plan was set up? It’s a condition that’s very easily understood.
As you suggest, the fly in the ointment could be whether the are funds guaranteed to be available ‘at time of need’ (sic). My preferred provider Golden Leaves say they are – and, despite inborn scepticism and looking as far as my fiscal insight can reach, I believe them.
On the other hand, it can be argued, who knows? Isn’t the whole system a house of cards? Are even ‘savings’ guaranteed? Will the banking system be hacked and bankrupted? We’re all stuffed, every which way if it does.
Plan away, if you have the cash, and it makes you feel better I say.
Just don’t fall for Age UK being a nice cosy charity – a trojan horse is what Dignity sleazily bought into (and Age UK knowingly sold!)
Surely plans are good for the FDs – especially high-priced corporate ones – that sell them in that when the death occurs they are guaranteed business which you might otherwise not have got. Locking in the business and making sure that the good, inexpensive local independent won’t get a look in is surely worth the commission paid to AgeUK.
‘you basically pay over the odds now for a funeral later with no guarantee that the full cost will be covered’.
Our plans are fully guaranteed for the services detailed in the plan application (we can’t guarantee services that are added at time of need of course). If people want to pay for their funeral in advance most of them want to know that everything is covered and that their family won’t have a huge shortfall to pay at the time when the plan is needed.
At best, if the family know about the possible shortfall beforehand they are at least aware that everything isn’t covered. Helped many families whose relatives had taken out GC funeral plans which they thought were fully guaranteed, only to find out they weren’t at time of need.
Whether these plans pay out or not is only part of the problem, the main problem is that the industry is not regulated, therefore anyone can set up a trust fund and sell funeral plans, considering the amount of money it is a very attractive proposition for scammers. Indeed there are in my opinion many companies out there with dubious credentials. However no one seems to care, surely it is in the best interest of both consumers and funeral plan companies to have this industry regulated, what are they scared of? Furthermore why hasn’t the NAFD looked into this. It beggars belief that such a sensitive area is just left for the wolves.
Does the NAFD ever look in to anything, or did I miss something?
I’d just like to comment on some of the previous statements made about pre paid funeral plans. A bit unfair I thought, and a bit inaccurate.
I can’t speak for all pre paid plans but Golden Charter certainly do have some guarantees.
They guarantee that the Funeral Directors costs will be met when the need arises.
Yes there may be some disbursements such as the doctors fee, Clergy fee, ect but Golden Charter make an allowance within the 3 plans offered of £1100 towards those fees, so even though its not guaranteed to fully pay disbursements, there’s a reasonable attempt to pay the majority of costs for the plan holder.
They will also bring the deceased plan holder home if he/she happens to die somewhere else in the UK, at no extra cost.
There are also other advantages not mentioned above. The plan holders wishes regarding what he would like to happen at the funeral, type of casket, religion, songs, ect can be stated on the plan.
Last but not least, Probate can hold up release of funds to pay for the funeral costs at the time its needed, the funeral plan is there to do that job, easing this problem at a difficult time for the relatives.
I hope that’s corrected some inaccuracies
all can be checked out on the website http://www.50plusfuneralplans.co.ok/?pid=314355
Thanks for taking the time to read my comments
Thank you for this bit of balance, George. Helpful.
I saw my Dad today – he told me that he’d been out shopping in Staines Middlesex and was accosted by ‘an independent’ funeral director in the precinct – boldly selling pre-paid funeral plans to interested passers by..
Intrigued by the forthright entrepreneurship of this firm, who I guessed could possibly be Lodge Bros, the obvious West London firm I thought qualified as independent, I pressed him to remember who it was?
He assured me it wasn’t Lodge’s, so I ran a few other names past him, he is after all my Dad, and has sons and grandsons working in the industry fairly locally. Who were they? I persisted..
”Smith’s of Staines” eventually came the answer. A Dignity company! Says I. If my Dad is confused, what chance toes everyone else have? Does anyone else know if funeral directors are taking to the precincts of Britain to sell pre-paid plans?
This is a revolting and utterly dispiriting story, David. Did he throw in a free scatter tube with every plan sold? Thoroughly infra dig — undertaker turned vagrant pedlar.
I expect someone in management said, “Ere, we’re quiet, get aht there and flog a few preneeds”.
There ought to be a street cry for funeral plans. I wonder what it would be.
“Give us yer wonga before you’re a gonna!”
“Pig in a poke before you croak!”
‘FIX THE PRICE OF YER FUNERAL!’ Would work as a come-on – yelled alongside the fruiterer’s ‘TWO POUND A POUND’ and such like?
Frankly this makes my blood run a little cold, because I think if they are doing it, then it must be working for them? Older people are often concerned about money – the ones I know worry that they will run out of dosh before they die, or that they will die leaving debt. Probably irresponsibly, when asked, I encourage any less well-off older person, to spend what little they have, and let someone else have the bother of disposing of their remains when the time comes. That said, I fear those nice people working the Mall from the ‘local’ funeral directors are probably pushing against an open door with many of these seniors.
I wonder if they’re offering a free pen or plastic domed clock as a generous thank you gift?
BTW, nice piece in the Guardian today Charles.
I’d just like to comment on some of the previous statements made about pre paid funeral plans. A bit unfair I thought, and a bit inaccurate.
I can’t speak for all pre paid plans but Golden Charter certainly do have some guarantees.
They guarantee that the Funeral Directors costs will be met when the need arises.
Yes there may be some disbursements such as the doctors fee, Clergy fee, ect but Golden Charter make an allowance within the 3 plans offered of £1100 towards those fees, so even though its not guaranteed to fully pay disbursements, there’s a reasonable attempt to pay the majority of costs for the plan holder.
They will also bring the deceased plan holder home if he/she happens to die somewhere else in the UK, at no extra cost.
There are also other advantages not mentioned above. The plan holders wishes regarding what he would like to happen at the funeral, type of casket, religion, songs, ect can be stated on the plan.
Last but not least, Probate can hold up release of funds to pay for the funeral costs at the time its needed, the funeral plan is there to do that job, easing this problem at a difficult time for the relatives.
I hope that’s corrected some inaccuracies
I’d just like to comment on some of the previous statements made about pre paid funeral plans. A bit unfair I thought, and a bit inaccurate.
I can’t speak for all pre paid plans but Golden Charter certainly do have some guarantees.
They guarantee that the Funeral Directors costs will be met when the need arises.
Yes there may be some disbursements such as the doctors fee, Clergy fee, ect but Golden Charter make an allowance within the 3 plans offered of £1100 towards those fees, so even though its not guaranteed to fully pay disbursements, there’s a reasonable attempt to pay the majority of costs for the plan holder.
They will also bring the deceased plan holder home if he/she happens to die somewhere else in the UK, at no extra cost.
There are also other advantages not mentioned above. The plan holders wishes regarding what he would like to happen at the funeral, type of casket, religion, songs, ect can be stated on the plan.
Last but not least, Probate can hold up release of funds to pay for the funeral costs at the time its needed, the funeral plan is there to do that job, easing this problem at a difficult time for the relatives.
I hope that’s corrected some inaccuracies
all can be checked out on the website
http://www.50plusfuneralplans.co.uk/?pid=314355
Thanks for taking the time to read my comments