What is the Canada Pension Plan Death Benefit and how has it changed?
The Canada Pension Plan (CPP) death benefit is a one-time, lump-sum payment to the estate on behalf of a deceased CPP contributor.
Up until this year the amount that one could be eligible to receive under the CPP Death Benefit would vary. It was dependent on how long the deceased contributed (if at all) to the Canada Pension Plan.
In 2016 the average amount that the Canadian government paid was approximately $2,300. There was a maximum of $2,500.
What has changed?
As of January 1, 2019, the amount of the death benefit for all eligible contributors is a flat rate of $2,500 regardless of the contributor’s monthly CPP amount.
Eligibility remains the same
To be eligible for the death benefit, the deceased must have made contributions to the Canada Pension Plan (CPP) for:
- One-third of the calendar years in their contributory period for the base CPP, but no less than 3 calendar years; or
- 10 calendar years
Contrary to what many people believe, all Canadians are NOT entitled to the Canada Pension Plan (CPP) Death Benefit.
The benefit is NOT payable to the funeral home to cover final expenses.
The CPP Death Benefit is NOT paid to the funeral home by the government; it is paid to the estate of the CPP contributor.
Most funeral homes WILL require payment at the time of services and will NOT wait for you to receive the death benefit. Payment from Service Canada takes approximately 6 to 12 weeks from the date they receive your completed application.
The CPP Death Benefit IS taxable.