How much of a pension does a survivor receive?
Ask MoneySense
When my husband dies, do I still receive his or a portion of his pension, and if so, how do I find out what it is?
–Donna
Pensions can make up a significant portion of a someone’s income in retirement. As a result, it is important to understand what happens if a spouse—or a parent—passes away.
Defined benefit pension survivor payments
Defined benefit (DB) pensions paid to retired employees often have a survivor component. Federal and provincial legislation may require a so-called joint and survivor benefit, typically 60% of the original pension.
Some plans allow different survivor percentages ranging from 0% to 100%. A spouse or common-law partner may need to sign a waiver for the pensioner to elect a lower survivor benefit.
If a plan member dies before retirement or before their pension begins, a surviving spouse is generally entitled to receive a monthly benefit or potentially a lump-sum commuted value that is based on the payout today required to produce the future pension benefit. Again, rules vary from pension to pension.
Some plans allow a pensioner to select a guarantee period of, say, five years, 10 years or longer, so that the pension payments would be payable to the plan member’s estate if they died before a certain number of payments were made.
So, your survivor benefit will depend on the terms of the pension, Donna. If your husband has not yet begun his pension, you should review the pension booklet or his annual statement for details.
If he has already started his pension, you can contact the pension plan to confirm.
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Canada Pension Plan survivor’s pension
The Canada Pension Plan (CPP) pays a benefit to a surviving spouse or common-law partner. It is a pro-rated portion of the retirement benefit earned by the deceased based on the numbers of years of marriage or cohabitation for the couple, Donna.
CPP legislation states that “a common-law partner is a person of either sex who has lived with you in a conjugal relationship for at least 1 year.”
- If you are under age 65, the survivor’s pension includes a flat rate portion plus 37.5% of your spouse’s retirement pension. This assumes you are not receiving other CPP benefits.
- If you are age 65 or older, the survivor’s pension is 60% of the contributor’s retirement pension, assuming you are not receiving other CPP benefits.
- If you are receiving other CPP benefits, like a retirement pension of your own, the combination of your retirement pension and the survivor’s pension cannot exceed the maximum retirement pension.
Similar Quebec Pension Plan (QPP) benefits are payable to Quebec residents.
CPP death benefits
There is a CPP death benefit payable to a surviving spouse, or to the estate or other eligible individuals. It is a one-time amount payable if the deceased made contributions for at least one-third of the calendar years during their contributory period for the base CPP, but no less than three calendar years, or at least 10 calendar years.
The benefit includes a basic amount of $2,500, and a possible top-up of $2,500, for a maximum benefit of $5,000.
There is a QPP death benefit of up to $2,500 payable to Quebec contributors.
Some pensions or retiree benefit plans have lump sum death benefits payable as well, Donna, so this may be worth investigating.
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Benefits for children
Children of defined benefit pension plan members may not be eligible to receive anything if the plan member has already started their pension. Survivor benefits are typically payable only to spouses or common-law partners.
The aforementioned guarantee periods may be an exception, as some pensions allow a retiree to ensure a certain number of monthly payments are made regardless. Some pensions also offer benefits for minor, dependent or disabled children of the plan member.
CPP and QPP both provide benefits for children. Eligibility requires a child to be either under age 18, or in the case of the CPP, aged 18 to 25 and in full-time or part-time attendance at a recognized post-secondary school. There is a flat-rate payment from both government plans.
Understand your survivor’s benefits today
In summary, Donna, lump-sum and ongoing payments may be payable to surviving spouses, children or estates of deceased pensioners. The particulars depend on the pension in question. It is important to understand these survivor benefits regardless of someone’s age as part of a financial plan that incorporates risk management, retirement planning and estate strategy.
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