The number of cohabiting couples is growing sharply, but they have far fewer rights than married couples or those in a civil partnership, leaving them vulnerable if their relationship breaks up.
There has also been a surge in the number of “singletons” who could find later life a greater struggle as they cannot share incomes and care responsibilities with a long-term partner.
Looser family structures can offer greater freedom, but many could come unstuck unless they are aware of the dangers and take action, such as building up savings in their own name.
The growth in cohabiting couples shows no sign of slowing, with 4.7 million people living together in England and Wales without marrying.
Gordon Andrews, tax expert at wealth manager Quilter, warned: “They do not enjoy the same rights as spouses or civil partners on death, or the same financial protection as a married couple with children. They are effectively living as second-class citizens when it comes to tax rights.”
In a landmark judgment last month, the Supreme Court opened the door to allow heterosexual couples to enter into a civil partnership, which would give them more tax and inheritance rights, although the Government has not said whether it will change the law yet.
Quilter said cohabitees are living dangerously as they do not automatically inherit anything on death, unless they jointly own property: “By contrast, a married partner would inherit all or some of their partner’s estate, even if no will has been left.”
Cohabiting partners who stay at home to care for children have few legal rights on property, maintenance or pension-sharing, leaving them vulnerable in case of a break up.
Andrews warned: “Married partners have a legal duty to support each other, but cohabiting couples are not legally obliged to support each other financially.”
He highlighted another danger: “Cohabiting partners have no access to a partner’s bank account if they die, whereas married couples may be allowed to withdraw the balance, providing the amount is small.”
Where couples are renting, married partners have the right to live in the “matrimonial home”, but this does not apply to cohabitees.
Rachael Griffin, tax and financial planning expert at Old Mutual Wealth, said women are particularly vulnerable: “A woman who has looked after children for more than 20 years could be left in poverty when a relationship ends. This is due to legislation steeped in history and not taking into account modern set-ups.”
The number of “singletons” approaching retirement is rising dramatically and they are facing a financial battle without the backup of a partner.
A record 3.4 million people aged between 50 and 64 are single, divorced or widowed, a rise of 900,000 in the last decade, official figures show.
Unmarried people represent almost a third of those approaching retirement, and although 68 per cent are married, this is a record low, down from 77 per cent in 2002.
Alistair McQueen, head of savings and retirement at insurer Aviva, said: “Funding retirement is a challenge for all, but the challenge is likely to be greater for those doing it on their own.”
The average pre-tax income of a single pensioner is £342 a week, less than half the £717 that couples can expect: “Single pensioners still have to carry many of the same costs as couples, such as housing and transport.”
Later life costs such as social care also pose a greater challenge for singletons with no immediate partner to provide support.
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