The cost of death puts thousands of dollars in debt for low-income families

The cost of death is forcing low-income families to fall months behind on rent, struggle to pay for food, and run into thousands of dollars in debt.

At least 300 people a year contact the Citizen’s Advice Bureau for advice on how to stretch overdrawn budgets to cover funeral costs. Some of them end up breaking KiwiSaver, while others take out loans they can’t afford or default on other payments.

Ben Rauhihi’s (Ngāti Pikiao, Te Arawa, Ngāti Raukawa) brother died two months ago and financial stress is now keeping him awake. He went into debt – $3,279 – to pay for the funeral.

“I barely sleep. Money is heavy on my mind,” the Lower Hutt man said.

Trevor Paul died two months ago, aged 61, with no life insurance or savings.

Jericho Rock-Archer / Stuff

Trevor Paul died two months ago, aged 61, with no life insurance or savings. “He was so generous – especially to the homeless people of Wellington – and would literally give you the shirt off his back,” says his brother Ben Rauhihi.

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At $5,560, the funeral was modest. The bill covered things like transportation, embalming, dressing and a coffin. The extended family pooled the money for the cremation — around $650 — but the majority of the bill, in Rauhihi’s name, remains unpaid.

This is despite having access to the maximum Funeral Hardship Grant from Work and Income – $2,280, or about 41% of the total bill.

“Somehow I have to try to find the extra money,” he said. “I haven’t had a chance to grieve yet.

However, with the bill still unpaid, he was charged an additional $500 in interest on Friday.

Ben Rauhihi is also worried about funeral costs in the future - a second brother has just a month to live, while a third is in poor health.  He wants the government to intervene by increasing the premium for funeral difficulties.

Jericho Rock-Archer / Stuff

Ben Rauhihi is also worried about funeral costs in the future – a second brother has just a month to live, while a third is in poor health. He wants the government to intervene by increasing the premium for funeral difficulties.

Have you had trouble paying for a loved one’s funeral? Email your story to [email protected]

Citizen’s Advice Bureau national adviser Sacha Green said funeral arrangements were expensive and put families in difficult situations.

“Even if they are eligible for the subsidy, there is often a significant discrepancy between that and the actual funeral cost,” Green said.

The cost of a simple funeral ranges between $6,000 and $8,000, with Consumer New Zealand estimating the average cost between $8,000 and $10,000.

It is a gap that some have urged the government to fill. Topping the list is the Funeral Directors Association (FDA), which says the grant hasn’t increased since 2003, aside from minor consumer price index (CPI) adjustments.

ROSS GIBLIN/STUFF

Neil Whiteman remembers helping his father as a child dig graves at Akatarawa Cemetery. Neil took over the job of sexton when his father retired in 1978 and he is still around and loves the job.

“It’s supposed to cover a lot of costs that it doesn’t cover,” chief executive Gillian Boyes said.

She offered a simple solution – increase the grant to $6,300. Such an increase, Boyes argues, has precedent in the ACC’s funeral provision for those who die from injury. “Why can’t the poor get what a person who dies of an injury gets?”

And yet, despite years of lobbying, the Department of Social Development has been evasive, she said.

The department’s director of customer service delivery, Graham Allpress, said the grant was ‘not intended to cover the full cost’ of the funeral.

CPI adjustments, meanwhile, have resulted in a 47% increase in the subsidy since 2003, he said.

Others argue that excessive increases risk simply transferring wealth from the government to the funeral industry.

Consumer New Zealand chief executive Jon Duffy said an increase would be a boon for the industry and those in mourning.

“Both sides would benefit,” Duffy said. However, offering a larger subsidy would mean that fewer people would be forced to “skip on the funeral”.

Green supported increasing the subsidy, but hoped that “broader thinking” could upend the status quo of the funeral industry.

New Zealand could look abroad for inspiration, she suggested, with not-for-profit funeral services becoming a “seamless, low-cost option” in Australia and the UK.

Trevor Paul was a famous face on the streets of central Wellington for several decades.

Phil Reid / Stuff

Trevor Paul was a famous face on the streets of central Wellington for several decades.

Duffy also referenced “a perceived lack of transparency” across the industry and suggested administrators itemize costs to ensure people aren’t caught off guard by unexpected bills. People should also be wary of funeral insurance, as the premiums sometimes add up to more than the cost of the funeral over time.

Stricter industry regulation is a controversial topic. A recent Department of Health review was welcomed by some on the ground and led to claims of “dodgy operators” from others.

Boyes denied claims that funeral directors prey on people as “a myth”. Costs had increased, and it was inevitable, she said. Wood for coffins was more expensive, for example, and chemicals used for embalming had also increased due to delays at sea.

Members of the FDA — which conducts about 75% of funerals nationwide — had to provide “a written cost estimate” and notify the bereaved if they changed, Boyes said.

Cemeteries and crematoriums were generally run by councils, with prices also tending to rise. The cost of burial plots increased by 23% between 2014 and 2021, with the cost of cremations increasing by 27% over the same period.

Trevor Paul was a regular at protests – including the Occupy Wellington protest in 2011, where he was responsible for campground security.

Andrew Gorrie / Stuff

Trevor Paul was a regular at protests – including the Occupy Wellington protest in 2011, where he was responsible for campground security.

Just last month, Wellington City Council proposed numerous death fee increases.

Rauhihi’s friend had applied for a loan to help pay the bill and avoid further interest charges. Even if that request was successful, Rauhihi thought paying back his friend could take years — as it stands, he only has $43 left a week after paying rent and other bills.

He also worried about the future. A second brother had just had “one month to live”, while a third was in poor health.

Rauhihi wanted the government to increase the funeral hardship grant, while bolstering other types of income support and ensuring that low-wage workers like him earn “a living wage”.

Trevor Paul (Ngāti Pikiao, Te Arawa) died of a heart attack on March 12.

He was a famous face on the streets of downtown Wellington for several decades – known as Koro to some, and “the grandfather of Wellington’s homeless” to others.

His youth was difficult, which later led him to altruism. He helped out at The Compassion Soup Kitchen and ran a music program at Berhampore.

“I’ve never heard anyone play guitar like my brother – and I guess I never will,” Rauhihi said.

About John Villalpando

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