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CPP Survivor Benefit: What Happens To CPP Survivor Pension at Age 65? If His or Her Spouse Dies?

Understanding what happens to your Canada Pension Plan (CPP) benefits if your spouse or partner passes away is important to avoid financial challenges. It might not be the first thing on your mind, but knowing the implications is crucial.

Misunderstanding CPP survivor benefits could lead to unwarranted assumptions about their generosity. Here’s a detailed overview of what you can anticipate and how to prepare for the complexities involved.

What Happens To CPP Survivor Pension at Age 65?

Determining CPP survivor benefits involves a multi-step calculation. Initially, the government establishes the hypothetical CPP payout the deceased would have received at age 65. Further calculations are then based on the surviving spouse’s age at the contributor’s death, as outlined below:

  • If the survivor is Age 65 or older: 60% of the contributor’s retirement pension (if the surviving spouse or partner isn’t receiving other CPP benefits), amounting to $692.75 (2019 monthly maximum).
  • If the survivor is Below age 65: A flat-rate portion plus 37.5% of the contributor’s retirement pension (if the surviving spouse or partner isn’t receiving other CPP benefits), totaling $626.63 (including a flat-rate benefit of $193.66).

The actual amount the survivor receives depends on various factors, including their age and whether they claim benefits before or after turning 65.

CPP Survivor Benefit Cap

In 2019, there is a per-person cap of approximately $1,154 monthly for CPP benefits. If a surviving spouse is already earning this maximum on their own, they won’t receive additional survivor benefits. Similarly, someone earning $1,000 individually would only receive up to $154 more in survivor benefits, reaching the $1,154 maximum.

Allowance for the CPP Survivor Benefit

Surviving spouses or partners aged 60 to 64 with low income can apply for the Allowance for the Survivor benefit. This non-taxable monthly benefit can go up to $1,375.17 (for the July to September 2019 period), provided the survivor’s annual income doesn’t exceed $24,816 in 2019. The application can be submitted as early as the month after the survivor’s 59th birthday.

Plan Ahead and Secure Your Future

Understanding the intricate details of government benefits, both individual and joint, is crucial for a secure retirement. Considering the potential financial impact, it’s vital to look beyond government income sources. Initiating tax-efficient savings early on, such as through a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA), can contribute significantly to ensuring a comfortable retirement, with or without CPP benefits.