The 2024 federal budget has introduced several changes to the Canada Pension Plan (CPP) benefits that affects the Death Benefit, Disabled Contributor’s Child Benefit, and Survivor’s Pension. These amendments increase support to families and individuals impacted by the death or disability of a CPP contributor.
It’s worth noting that these changes are not expected to affect CPP contribution rates. Let’s take a look at these amendments and what they mean for you.
1. CPP Death Benefit
The CPP Death Benefit is a one-time payment made to the estate of a deceased CPP contributor or other eligible individual to help with funeral expenses and other related costs.
Eligibility criteria for the death benefit remains unchanged, with the benefit payable if the deceased had contributed to the CPP for a “minimum qualifying period”. The minimum period is one-third of the years during their base CPP contributory period (no less than 3 calendar years), or 10 calendar years.
In the 2024 federal budget, the government has proposed a top-up to the $2,500 death benefit for certain CPP contributors.
Increased Death Benefit for Certain CPP Contributors: The death benefit increases from $2,500 to $5,000 for deceased CPP contributors who have no survivors and who have never collected CPP payments, with exception of the orphan’s benefit for a surviving child.
This increase reflects the rising costs associated with end-of-life expenses. The death benefit has not been increased from the $2,500 level since 1998.
2. CPP Children’s Benefit
The CPP Children’s Benefit provides monthly payments to dependent children of disabled or deceased CPP contributors. The monthly child benefit is a flat rate that’s adjusted annually. For 2024, the rate is $294.12 per month for both disabled and deceased contributors.
There are two types of CPP children’s benefits:
- A disabled contributor’s child’s benefit – a monthly payment for a child of the person receiving a CPP disability benefit
- A surviving child’s benefit (aka “orphan’s benefit’) – a monthly payment for a child of a deceased contributor who has met the contributory requirements for the CPP death benefit
Included in the 2024 budget are some notable updates to the CPP Children’s Benefit.
A New Partial CPP Contributor’s Child Benefit: Currently to qualify for the benefit, the CPP contributor’s child must be under 18, or aged 18 to 24 and attending full-time school. The 2024 budget proposes the addition of a new partial Child’s Benefit for part-time students aged 18 to 24.
Maintain Eligibility for a Disabled Contributor’s Child Benefit Beyond Age 65: Currently, the CPP Child’s Benefit ends when the disabled CPP contributor reaches age 65. This amendment will extend eligibility for the child benefit regardless of the age of the disabled CPP contributor.
Extend CPP’s Incapacity Provisions to Protect the Date of Application for the Disabled Contributor’s Child Benefits: If a CPP contributor was unable to apply for a CPP disability or child benefit due to being physically or mentally incapacitated, the CPP contributor may still qualify for the Child Benefit by requesting the incapacity provision and applying within a year of regaining capacity.
Normally, retroactive payments are made up to the one year period, though there is no set limit if deemed incapable of applying earlier.
Clarify the Determination of the Payee of a Disabled CPP Contributor’s Child Benefit: Currently, the child benefit may be paid to the child of a disabled contributor aged 18-24.
Where a child is under 18, the benefit is paid to the disabled contributor if the disabled contributor has “custody and control” of the child and the child lives with the disabled contributor. If the child is living apart from the disabled contributor, payment is made to the person or agency having “custody and control” of the child.
One of the current challenges is that the CPP legislation does not clearly define “custody and control”. This has resulted in disputes and court cases over separated or divorced parents about which party is entitled to receive the child benefit on behalf of the child.
3. CPP Survivor Pension
The CPP Survivor Pension provides ongoing financial support to the surviving spouse or common-law partner of a deceased CPP contributor. To qualify for the CPP survivor’s pension, you must be legally married to a deceased CPP contributor or be the common-law partner of a deceased CPP contributor.
You qualify for the survivor pension even if you remarry. The amount you would receive as a survivor pension depends on whether you are under age 65 or over, and for how much and how long the deceased contributor paid into CPP. The 2024 federal budget introduces a key change to this benefit outlined below.
Precluded Entitlement to CPP Survivor Pension Where Individuals Have Received a Pension Spit: Currently, couples who are legally separated, but still legally married or in a common-law relationship, may be eligible for a survivor pension when their ex-spouse or partner dies.
This CPP amendment would exclude separated spouses from receiving a CPP survivor benefit if they have already received a “division of unadjusted pensionable earnings” or pension split.
When couples separate or divorce, they can elect to have their CPP contributions equally divided during the time they lived together. This is called credit splitting. It may help CPP contributors to qualify for certain benefits and may also affect the amount of any current or future benefits under the CPP program.
Given that credit splitting already equalizes CPP pension upon separation or divorce, this amendment precludes separated couples from also being eligible for the survivor pension.
Implications and Future Outlook
The 2024 federal budget introduced key changes to CPP benefits for families.
For those affected by these changes, it’s important to stay informed about how the new rules may impact you directly. Consulting with a financial planner or government resource can help you navigate these amendments and make the most of the benefits available to you.
