What Do Retirement Plans Provide When a Contributor Dies?

Here's a look at what public plans, private plans and other agencies offer when a contributor dies.

Québec Pension Plan

The Québec Pension Plan (QPP) provides survivors' benefits to the next of kin of workers who made sufficient contributions during their lifetime.

You have made sufficient contributions if you:

• contributed for at least one-third of your contributory period* and for at least 3 years
  
  or
• contributed for at least 10 years.
  
  * Your contributory period begins the year you turn 18 or on January 1, 1966, if you reached age 18 before that date. Your contributory period ends when you begin receiving your retirement pension, when you die, or when you reach age 70.

For deaths on or after January 1, 2013, all contributions made by a worker are taken into account to determine eligibility for survivors' benefits, regardless of whether the contributions were made before or after retirement. This provision ensures that work done after retirement is recognized.

The eligibility requirements for survivors' benefits are relaxed for persons who were entitled to an amount for a severe and prolonged impairment in mental or physical functions during their contributory period. Specific eligibility requirements apply to those contributors:

• They must have contributed to the Plan for a quarter of their contributory period and for at least 3 years.
• They must not have received a retirement pension or disability pension under the Plan.

The QPP provides 3 types of benefits in the event of a contributor's death:

The death benefit

This benefit is a lump-sum payment of $2,500. Within 60 days of the death, a payment is made to the person or the charitable organization that paid for the funeral expenses, but only up to the amount paid, if less than $2,500. The remainder, if any, can be paid to the estate. After 60 days, the benefit can be paid to the heirs. If there are no heirs or if the heirs have renounced the estate, the benefit can be paid, in the following order, to the deceased person's spouse, descendants, or ascendants.

The death benefit is taxable. It must be included in the estate's income tax return.

Entitlement to a death benefit is generally determined according to the number of years the deceased person contributed to the Plan. However, as of January 1, 2013, the requirement has been relaxed, and the death benefit can now be paid regardless of the number of years of contribution. Deceased persons who did not accumulate enough years of contribution can give their loved ones entitlement to a death benefit if they made at least $500 in contributions to the Plan and no retirement pension or disability pension was paid to them. However, the death benefit amount is equivalent to the contributions paid (between $500 and $2,500).

The surviving spouse's pension

This pension is intended to ensure a basic income for the deceased contributor's spouse. It can be paid:

• to married spouses (same sex or opposite sex) who are not legally separated
• to spouses in a civil union (same sex or opposite sex)
• to de facto spouses (same sex or opposite sex)
• to legally separated spouses, under certain conditions.

Note that Retraite Québec considers your de facto (common law) spouse to be the person with whom you have been living in a conjugal relationship for:

• at least 3 years
  
  or
• 1 year if a child has been or is to be born of your union, or if you have adopted a child.

The amount of a surviving spouse's pension varies according to the following factors:

• the contributions that the deceased made to the Plan
• the surviving spouse's age
• whether the surviving spouse supports dependent children of the deceased person
• whether the surviving spouse is disabled
• whether the surviving spouse is already receiving a retirement or disability pension.

Amounts indicated below are valid for benefits that begin between January 1, and December 31, 2023.

All QPP pensions are indexed in January of each year in order to account for inflation. They are also taxable.

You can receive both a surviving spouse's pension and a retirement pension or a surviving spouse's pension and a disability pension. In either case, Retraite Québec pays both pensions in a single monthly payment know as a "combined pension." The combined pension is not necessarily equal to the sum of both pensions since it is subject to a maximum determined by law.

Note that:

• If your spouse dies in your first year of marriage or civil union, specific rules apply.
• If your spouse was receiving a retirement pension at his or her death, payment of his or her pension will cease.
• If you receive a surviving spouse's pension and you remarry, you will not lose your surviving spouse's pension.

For deaths on or after January 1, 2013, the surviving spouse's pension amount is increased if the deceased spouse was entitled to a retirement pension supplement. This change ensures that work done after the deceased's retirement pension began is recognized for the benefit of his or her spouse.

The orphan's pension

The person whose dependent is the minor child of the deceased person will receive an orphan's pension until this child reaches 18 years of age. In 2023, the orphan's pension amount is $255.03 a month.

The Canada Pension Plan and the Old Age Security program

If you work elsewhere in Canada, you probably contribute to the Canada Pension Plan (CPP). This plan also pays death benefits, but the legislative provisions that govern these benefits differ from those that govern death benefits under the QPP.

Widowed persons age 60 to 64 could also be entitled to the Allowance for the Survivor  under the Old Age Security (OAS) program. For details related to your situation or for more information on the CPP and the OAS program, consult www.canada.ca .

If the deceased person worked outside Canada

He or she may have contributed to another country's plan, and you may be entitled to benefits if the Gouvernement du Québec has an international social security agreement with the country.

Private pension plans

When a person participates in a private pension plan, benefits are usually paid upon his or her death. Contact the administrator of that person's pension plan to see if such benefits are provided.

Other benefits in case of death

In addition to the death benefits mentioned above, other benefits are provided by various organizations in the event of death:

Insurance companies

Some insurance companies offer individual or group life insurance. Check whether the deceased person held such an insurance policy, and verify the terms and conditions of the benefits.

The Commission des normes, de l'équité, de la santé et de la sécurité du travail

The Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST) provides a death benefit when a person's death is caused by a work-related accident or occupational disease. For more information, contact the deceased person's employer.

The Société de l'assurance automobile du Québec (SAAQ)

When a person dies from a car accident, the SAAQ  pays a death benefit.

The Ministère de l'Emploi et de la Solidarité sociale

A special benefit  may be granted by the Ministère to repay the cost of funeral expenses for a deceased person who was not necessarily receiving last-resort financial assistance (social assistance).

The Bureau d'aide aux victimes des actes criminels

Québec has implemented measures to help and compensate victims of criminal acts .

Worth knowing about...

• Each plan or program has its own definition of de facto (common law) spouse. Check the definition with each organization that might eventually pay you a benefit.

• Public Retirement Plans : A Guaranteed Base Income
• How Much Will You Receive from Public Programs in Retirement?