The Importance of Understanding CPP Survivor Benefits

The Canada Pension Plan (CPP) is one of the core components of Canada’s retirement income system and can provide a significant income to a CPP survivor. A person is considered as a “CPP survivor” if he or she was married to or was the common law partner of a CPP contributor.

It is important to understand what can be expected upon the passing of a CPP-contributing spouse or common-law partner. Final decisions regarding survivor benefits will be made according to all sources of retirement income. That is why a well-prepared advisor means a well-prepared client. The Advisor will draw your attention to important details and assure that you are well prepared too. All CPP contributors should regularly review their Statements of Contribution (SOC) for accuracy.

Pre-Conditions
To qualify as a CPP survivor:

• The contributor must have made payments to the CPP for either 10 years, or a third of their contributory period, but not less than three years.
• The surviving spouse or common-law partner must have dependent children, be disabled, or be at least aged 35.

Bill C-26
In December 2016, Bill C-26 was passed and it amended the CPP. It increases the covered earnings and the earnings replacement. The retirement benefits arising from the new rules will in turn increase survivor benefits.

It takes time for changes to mature so, unfortunately, current survivors and those who may become survivors soon, will not see much of a change. Nonetheless, survivors should apply for benefits as soon as possible, as retroactive payments are only valid up to 12 months.

Special Circumstances
Couples sharing their CPP will, when one of them dies, have the pension adjusted to what it would have been before sharing. There are other special circumstances such as special Remarriages or deathbed marriages, that have rules that are worth researching.

Orphan Benefit for Contributors’ Children
As long as the deceased contributed to CPP for the minimum periods described earlier, it is possible for eligible children to receive a CPP Orphan Benefit. This is a flat benefit, which in 2017 translated into $241.02 per month per CPP contributing parent.

Other Retirement Income
Other retirement income affect the final amount a survivor will receive in CPP monthly payments. It is important to be aware of the various benefits and limitations of Survivor Benefits. Below are some very useful links:

Useful liks
Benefits payment calendar
CPP contribution rates, maximums and exemptions
Our investment solutions financial calculators