CPP death and survivor benefits explained
The lump sum death benefit was introduced to help the families of deceased contributors deal with funeral expenses. However, the benefit can be used for any purpose.
The amount of the benefit is the amount that the deceased’s CPP retirement pension is, or would have been if he or she had been age 65 when death occurred. The death benefit is equal to six months’ worth of this calculated retirement pension, up to a maximum of $2,500.
According to the legislation, the death benefit is payable to the estate of the deceased. In practice, it is often paid directly to the surviving spouse or common-law partner, or other surviving relative in charge of the deceased’s final expenses. The beneficiary must file a formal application, which must include a copy of the death certificate, in order to receive this benefit.
Most Canadians are unaware of the availability of the CPP death benefit, and every year the death benefit is paid to only a small fraction of all eligible deaths.
An individual, who at the time of death, was the legal spouse or common-law partner of a deceased CPP contributor and who also meets the minimum eligibility qualifications, may be eligible for a survivor’s pension.
For purposes of the CPP, a spouse refers to an individual to whom you are legally married. A common-law partner refers to an individual—regardless of sex—with whom you live in a conjugal relationship for at least one year.
The value of the pension and the timing of pension payments depend on the age of the surviving spouse or common-law partner, his or her personal CPP retirement or disability benefits and whether or not the survivor has dependants.
A survivor’s pension is not impacted if the surviving spouse remarries or enters into a common-law relationship. Similarly, benefits will continue to be paid to a surviving common-law partner even if he or she gets married or enters into a new common-law relationship.
A legal spouse who was separated from the contributor at the time of the contributor’s death, may be entitled to a survivor’s pension provided the contributor is not survived by a common-law partner with whom the contributor cohabited.
A same-sex common-law partner may also be eligible for CPP survivor benefits provided his or her deceased partner contributed to the CPP for the minimum qualifying period.
Note: The Québec Pension Plan differs somewhat in the flat rate component of survivor’s pensions, and the age brackets are also further subdivided between ages 45 to 54, and 55 to 64.
An orphan of a deceased CPP contributor may receive a monthly children’s benefit up to 18 years of age, and up to 25 years of age if he or she is enrolled full-time in an approved educational institution. A child refers to a natural or adopted child of the deceased contributor or a child in the care and control of the deceased contributor at the time of death.
The surviving spouse or common-law partner of a deceased contributor may receive the equivalent of the orphan’s benefit for each eligible dependent child.
Orphan’s benefits are suspended if the child reaches 18 years of age and is not in school full-time, apart from normal vacations or brief absences. However, benefits may be reinstated without retroactivity if a child over 18 years of age returns to school full-time. The marriage of a child does not interrupt payment of the benefit, provided all of the other eligibility requirements are maintained.
The CPP and QPP orphan’s pension is a flat monthly rate, indexed annually by the Consumer Price Index. A child may receive up to two flat rate pensions if both parents were contributors and are either deceased or disabled.
If you have questions about CPP death benefits, estate planning or taking care of your family in case of an unexpected death in Ottawa please contact me.