A Quick Guide to the CPP Survivors Benefit

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Though not something many people want to think about, planning for the death of a spouse or common law partner is an essential part of a financial plan.  Unfortunately, many people are shocked when they realize that the survivor benefits that they receive from the government may not be as much as they were expecting.  Below is a quick guide to CPP survivor benefits and how much you can expect to receive.

What You Need to Know

1. Death Benefit

The CPP death benefit is a one-time lump sum payment that is meant to offset funeral expenses.   As of January 1, 2019, the death benefit is a fixed amount of $2,500.   In order to claim the death benefit, the deceased must have contributed to the CPP for at least one third of the calendar years in their CPP contribution period (for no less than 3 years).  Alternatively, the death benefit may be claimed if the deceased contributed to the CPP for 10 years.

The death benefit should be claimed by the executor of the estate within 60 days of death, however, if no estate exists than the benefit is paid out in the following order:

  • The person or institution that is responsible for paying for funeral expenses. 
  • The surviving spouse or common law partner of the deceased
  • The deceased’s next of kin.

2. Survivor Pension

The survivor’s pension is a benefit paid to the spouse or common-law partner of the deceased.   The amount of the benefit is determined by two factors:

  1. Whether the survivor is under or over 65 years of age
  2. How much and the amount of time that the deceased contributed to the CPP

The actual benefit paid is calculated by determining what the deceased CPP would have been than and then calculating what the survivor benefit is based on the following guidelines.

Survivor Under 65

Spouses/Common Law Partners under the age of 65 are eligible to receive a survivor’s pension in Canada.  The pension is made up of a flat rate portion and 37.5% of the contributor’s retirement pension, assuming the survivor is not taking their own CPP retirement benefits.  According to Service Canada, the average survivor pension for someone under 65 in 2019 was $439.00. The maximum benefit available is $626.63.

Survivor Over age 65

If the surviving spouse is over 65 than they are entitled to 60% of what the deceased was entitled to under CPP. However, this amount is only paid if the spouse is not receiving any other CPP benefits.  In the case that the surviving spouse is already receiving CPP benefits, then no more than the maximum CPP pension amount will be paid out to them. 

Other Considerations for the Survivors Pension

  • If you have been widowed more than once, you may only receive one survivors’ pension.  You will receive whichever benefit is higher.
  • Previously, if under the age of 35, a surviving spouse was not eligible to receive a survivor’s pension.  This is no longer the case and widows/widowers under 35 may apply.
  • The most that can be paid to a survivor is receiving CPP disability benefits and CPP survivor benefits is the maximum CPP disability amount.

3. Children’s Benefit

CPP pays a benefit to children of deceased or disabled CPP contributors.   It is available to children under the age of 18 or if they are in school full time and under the age of 25.   The children’s benefit is a set amount of $250.27 per month in 2019.  A child may be eligible for up to 12 months of retroactive payments if they do not apply immediately following a parent’s death.

The Bottom Line

Understanding your benefit entitlement is essential to maintaining your standard of living upon the death of a spouse.  The above information should emphasize the need to save personal assets to assist you into retirement, as often times government benefits are not sufficient.  You are welcomed to have a conversation with us to help you plan for reduced income and ensure that you can have peace of mind.

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Disclaimer

This information is designed to educate and inform you of financial strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a Qualified Financial Advisor.