The article “The Limits of Old Age Security Survivor Benefits” was originally published on MoneySense on January 2, 2019.
Lillian lost her husband and wants to know what happens to his Old Age Security pension.
Q: My husband died in 2015 at the age of 56. He would have been 65 in 2024. Will I be able to receive his Canada Old Age Security when this date arrives?
A: Old Age Security (OAS) is a Canadian government pension. Entitlement is based upon years of residency in Canada, with a full pension payable for those with 40 years of residency between age 18 and 65, subject to some conditions.
The earliest the pension can begin is age 65. It can be deferred until 70, with payments increased with each month you defer after your 65th birthday.
When someone dies, their survivor benefits from other government pensions like the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) can be much more lucrative than OAS, but there may be an OAS benefit entitlement under the right circumstances.
Some conditions, Lillian, are as follows:
- You must be between 60 and 65 (including only the month of your 65th birthday);
- You must be a Canadian citizen or a legal resident;
- You must live in Canada and have lived in Canada for at least 10 years since you were 18;
- You must not be remarried or common-law; and
- Your income must be below the annual threshold ($24,552 in 2018 for 2019 recipients).
So, Lillian, if you meet the conditions above, you should be entitled to what is called an Allowance for the Survivor. The application form can be found here. Service Canada administers this pension.
Given your husband would have been 60 years old in 2019, I suspect you may be around the same age? It is recommended that you apply for the Allowance for the Survivor at least 6 months prior to your 60th birthday.
The unfortunate part of the Allowance is that you need to proactively apply for the benefit, and I suspect many potential recipients are not aware and do not apply. Given one condition for the Allowance is a low income – below the aforementioned $24,552 in 2018 for 2019 recipients – it is particularly unfortunate that inaction can lead to lost income for those who may need it the most.
The income calculation for Allowance purposes is based on your CPP/QPP, pension income, RRSP/RRIF withdrawals, EI benefits, investment income, rental income, and employment/self-employment income, less certain eligible deductions like RRSP contributions, union dues, and employment expenses. A Statement of Income must be filed with Service Canada along with your initial application to determine eligibility. Thereafter, eligibility is based on your net income on line 236 of your T1 personal income tax return, so long as it is filed on time by April 30.
Once your Allowance entitlement begins, it will stop the month after you turn 65, even if you don’t start your own OAS right away (again, you can choose to defer your OAS pension as late as 70). If you leave Canada, remarry or become common-law, or die, your Allowance may stop. If your income exceeds the annual threshold, this too may end your Allowance entitlement.
In summary, Lillian, you may be eligible for an Allowance for the Survivor as a partial, albeit very limited survivor OAS benefit for your husband. There are many conditions, but it may be advisable to apply at age 59 regardless just so that the process has started.
Even if you don’t qualify initially, you may qualify at some point between age 60 and 65, or the eligibility rules could change. Filing an initial application at least triggers the process whereby Service Canada will validate eligibility each year with Canada Revenue Agency (CRA) based on income, marital status, and residency.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.