When a spouse dies, navigating the financial landscape can be challenging. Knowing what happens to the Canada Pension Plan (CPP) and Old Age Security (OAS) benefits during this time is crucial for financial stability. CPP and OAS are essential financial aids provided by the Canadian Federal Government to support citizens after retirement. Here’s a detailed look at what happens to these benefits when a spouse passes away.
Definitions
CPP and OAS: These are retirement benefits for Canadian citizens. CPP is based on individual contributions from employment, while OAS is a universal benefit for those over 65, regardless of work history.
Benefits After Death
When a spouse dies, the CPP benefits undergo several changes:
- Survivor’s Pension: The surviving spouse may receive a portion of the deceased’s CPP. This survivor’s pension is a monthly payment based on the deceased’s contributions to CPP.
- Amount Received: The surviving spouse under 65 can receive 37.5% of the deceased’s pension, plus a flat-rate benefit. Over 65, the survivor receives 60% of the deceased’s CPP.
- Children’s Benefits: If the deceased has dependent children, they may be eligible for the CPP children’s benefit, provided they are under 18 or between 18 and 25 and enrolled in full-time education.
OAS Benefits
OAS benefits are handled differently:
- Cancellation: OAS payments are canceled upon the beneficiary’s death. The benefits stop at the end of the month in which the individual dies.
- Recovery of Payments: Any OAS payments received after the date of death must be returned to the government. This ensures that funds are appropriately managed and redirected.
Necessary Documentation
To continue receiving or to claim new benefits, the surviving spouse must provide certain documentation:
- Death Certificate: Issued by the provincial government, confirming the death.
- Proof of Relationship: Such as a marriage certificate or common-law declaration.
- Funeral Home Statement: Certified by the funeral director.
- Medical Certificate: A statement from a healthcare provider confirming the death.
Outside Canada
If the death occurs outside Canada, additional documentation may be required, such as:
- International Death Certificate: Verified by Canadian authorities.
- Foreign Funeral Home Statement: Certified by an international funeral director.
Financial Adjustments
Upon the death of a spouse, financial adjustments are necessary to reflect the change in household income:
- CPP Adjustments: The surviving spouse will receive a recalculated amount based on the survivor’s pension rules.
- OAS Adjustments: The OAS benefits cease, and any overpayments must be returned.
Knowing the aftermath of a spouse’s death is emotionally and financially challenging. Knowing the nuances of CPP and OAS benefits can provide some stability. While OAS benefits end upon the death of the beneficiary, CPP benefits may continue to provide financial support to the surviving spouse and dependent children. Proper documentation and timely communication with government authorities are crucial to ensuring a smooth transition.
FAQs
What happens to OAS after a spouse’s death?
OAS benefits stop at the end of the death month, and any overpayments must be returned.
How much CPP does a surviving spouse get?
A surviving spouse under 65 gets 37.5%, while over 65, they receive 60% of the deceased’s CPP.
Can children receive CPP benefits after a parent’s death?
Yes, dependent children under 18 or full-time students under 25 may receive CPP children’s benefits.
Is a death certificate required for CPP adjustments?
Yes, a death certificate and proof of relationship are needed to adjust CPP benefits.
What if the spouse dies outside Canada?
Additional documents like an international death certificate and foreign funeral home statement are required.