By Sheryl Smolkin
Read this article and comments at Moneyville.ca
If your spouse died recently you should immediately apply for survivor benefits under the Canada Pension Plan, even if you are already collecting a CPP retirement pension.
CPP Survivor benefits are payable to a spouse, common law spouse and children who are under 18 (or until age 25 if they are still in school.) The size of the cheque depends on how long the deceased contributed to the program (a minimum of three years), his or her age at the date of death, and the amount of your CPP retirement pension.
Benefits payable include a maximum one-time lump sum of up to $2,500 plus a maximum monthly pension in 2011 of:
– $529.09 if you are under age 65.
– $576 if you are over age 65.
– $218.50 for each child.
But you are entitled to receive a maximum of $960/month in combined benefits. According to Service Canada, the average CPP retirement benefit paid in September 2010 was $504.50. If you were receiving the average amount and your spouse died earlier this year, you would be entitled to an additional amount of up to $455.50 in survivor benefits.
Richard Shillington prepared a report on the take up of government benefits for the Task Force on Financial Literacy. He says there is considerable confusion between CPP survivor and retirement benefits. Often individuals are receiving either benefit but are not aware they are entitled to both.
For example, Marie Baxter’s husband died close to her 65th birthday and she applied for both CPP survivor and CPP retirement benefits at the same time. The department made an error and she only got her survivor benefits. Ten years later when she requested a replacement T4 slip, a clerk advised her she had not been receiving her own retirement pension.
Retroactive CPP payments are typically limited to 11 months unless the government makes an administrative error. Baxter finally received back payments for the full period without interest, but only after the media took up her cause.
So remember — if you don’t apply for survivor benefits, you won’t get them. And after you make your application check to see that you are getting correct amount and ask questions if it doesn’t look right. “When you get a CPP cheque there is no way of knowing how much you are getting from retirement and how much you are getting from survivor. It’s just a number,” Shillington says.