The final installment in this 3 part series will focus on the Canadian Pension Plan Survivor Benefits. These benefits are paid to a deceased contributor's estate, surviving spouse or common-law partner and dependent children. There are three types of benefits:

• The death benefit. This is a one-time payment to, or on behalf of, the estate of the deceased CPP contributor;
• The survivor's pension. This is a monthly pension paid to the surviving spouse/common-law partner of the deceased contributor.
• The children's benefit. This is a monthly benefit paid for dependent children of the deceased contributor.

It is very important that these benefits be applied for; if they haven't been applied for you may lose benefits that are you are entitled to. In order for your survivors to be entitled to benefits there is a minimum contributory requirement of at least 3 years. If your Canada Pension Plan "contributory period" is longer than nine years, you must have contributed in:

• one third of the calendar years in your contributory period, or
• 10 calendar years, whichever is less

The Canadian Pension Plan death benefit

This is a one-time, lump-sum payment made to the estate of the deceased contributor. If there is no estate, then eligibility for this payment are as follows:

1. Person who is responsible for the funeral expenses.
2. The surviving spouse, common-law partner or next of kin may be eligible, in that order.

The amount of the death benefit will depend on how much and how long the deceased person contributed into the Canadian Pension Plan. The dollar amount is calculated by what the retirement pension would have been if the deceased had been 65 when death occurred; the benefit is equal to 6 months of this pension, up to a maximum of $2500.

The Canadian Pension Plan survivor's pension

The surviving legal spouse or common-law partner of a deceased contributor to the Canadian Pension Plan qualifies for this benefit. A person who is still a legal spouse but is separated at time of death may still be eligible if there is no current common-law partner. The amount the surviving spouse will receive depends on:

• Whether or not the spouse/common-law partner is also receiving a Canadian Pension Plan disability or retirement pension.
• How much, and how long the contributor paid into the plan.
• The age of the spouse/common-law partner when the contributor died.

CPP will first calculate how much the contributor's retirement pension is, or would have been, if he/she had been 65 when they died. A further calculation is then done based on the survivor's age at the time of the contributor's death. If the surviving spouse is:

• Aged 65 and over they will receive 60% of the contributor's retirement pension, if they are not receiving any other Canadian Pension Plan benefits.
• Aged 46-64, or under age 45 and disabled, or raising a dependent child, they will receive a flat rate plus 37.5% of the contributor's pension if they are not receiving any other Canadian Pension Plan benefits.
• Under the age of 45 and not disabled and not raising a dependent child, they will receive as above, but minus 1/120 for each month the spouse/common-law partner is under the age of 45 at the time of the contributor's death.
• Under the age of 35 and not disabled and not raising a dependent child, they will not be paid until they reach the age of 65, or become disabled.

The Canadian Pension Plan children's benefit

If a child has lost at least one parent who was a Canadian Pension Plan contributor, they may qualify for a benefit, provided that the deceased parent has met the contributory requirements. This benefit is paid as a flat rate that will be adjusted annually. If both parents are deceased and/or disabled and paid into the Canadian Pension Plan for the minimum amount of years, the child may qualify for 2 benefits. For children under the age of 18 this benefit is generally paid to the person that the child is living with. For children 18 years of age and older who are attending school fulltime (this includes college and university) the benefit will be directly paid to the child upon his/her application.

The Canada Pension Plan (CPP) is designed to provide basic benefits for contributors who retire or who become disabled. It is a taxable monthly benefit is paid to those who have contributed to the plan; it is based on how much and how long a person contributed to the plan as well as the age of retirement. Its function is to replace approximately 25% of the earning's of which the person's contributions are based.

Canadian Pension Plan offers 3 kinds of benefits:

• Retirement pension
• Disability benefits for contributors with a disability and their dependent children
• Survivor benefits which include the death benefit, the survivor’s pension and the children’s benefit

Retirement Pension

Qualification for CPP benefits requires at least one valid contribution to the Plan as well as:

• The applicant is at least 65 or
• The applicant is between 60 and 64 and meets the earning requirements

If the applicant is between the ages of 60 and 64 they must do one of the following in order to qualify for benefits:

• Stop working or
• Earn less than the specified amount ($884.58 for the 2008 year) the month preceding and the month following the month your pension begins.

Once pension benefits are received the applicant can work on an unlimited basis, however no more contributions to CPP will be eligible.

The age in which a person decides to take their Canadian Pension Plan determines the amount they will receive. The pension usually begins the month after the contributor turns 65. If you choose to receive this pension earlier than 65, the monthly payment will be smaller, if you choose to receive this pension later than 65 up to the age of 70 the monthly payment will be larger. The amount is adjusted 0.5% for each month before or after your 65th birthday from the time you begin to receive your benefits; this adjustment is permanent so if you choose to apply for your pension early the payments will not increase when you turn 65.

Several factors to consider regarding when to take your retirement pension are:

• Whether or not you are still working and contributing to the Plan
• The length of time in which you have made contributions
• How much you have earned (which may affect how much you’ve contributed)
• How much other retirement income you have
• The type of retirement you plan on having
• Your health

It is possible to get an estimate of your retirement pension at the CPP website. This can help you determine when to apply for retirement benefits, as well as give you an idea of how much you will receive should you apply for your benefits. If you decide to retire, it's best to apply for your Canadian Pension Plan benefits at least 6 months in advance; delay in application may result in lost benefits.

If you apply for your Canadian Pension Plan benefits after the age of 60, but before the age of 65 your pension starts at the latest of these following times:

• the month you specify on your application
• the month you stop working
• the month following your 60th birthday
• when your earnings are less than the allowable maximum pension payment for 2 months in a row

If you apply to begin receiving your benefits before you turn 65 or later you will begin to receive your benefits:

• the month of your 65th birthday
• the month you have specified on your application
• the 11th month prior to the month the CPP receives your application

Disability Benefits

The Canadian Pension Plan Disability Benefits provides a monthly benefit that is taxable to contributors who are disabled and to their dependent children. This benefit includes a fixed amount that everyone receives plus an additional amount that is based on your Canadian Pension Plan contributions during your entire working career; there is a maximum that can be received. Children under the age of 18 as well as children aged 18-25 who are attending school full time also receive a benefit (in 2008 the amount is $208.77); children can only receive this benefit if at least one parent is receiving the CPP disability benefit.

In order to qualify for this disability benefit the applicant must:

• be under 65
• have earned a specified minimum amount and contributed to CPP while working for a minimum amount of years
• have a severe and prolonged disability as defined by CPP legislation

The current legislation defines 'disability' as a physical and/or mental condition that is 'severe and prolonged' that regularly stops the applicant from being able to do any type of work. This relates to full-time, part-time as well as seasonal work; as well the applicant's disability is a long-term condition or is likely to result in death.

If the applicant has not contributed for enough years they may still qualify if:

• they have delayed applying and had enough years of contribution when they first became disabled and have been continuously disabled since then but now do not have enough contributions
• the applicant's CPP contributions were stopped/reduced due to raising children under the age of 7
• the applicant has obtained enough CPP credits from a former spouse/common-law partner through the credit sharing to make them eligible
• the applicant worked in another country in which Canada has a social security agreement and that when added to the CPP contributions equals the minimum requirement
• the applicant was medically incapable of applying

If a person is receiving Canadian Pension Plan disability benefits they will automatically convert into a retirement pension at the age of 65. There is no new application needed; however the retirement pension is usually lower than the disability benefit; applying for OAS benefits at this time is recommended. If the applicant is receiving retirement benefits when their disability benefits is approved CPP will automatically switch the applicant to disability benefits if it is clear that the disability started before the retirement pension began.

The next blog will address the Canada Pension Plan Survivor Benefits and will be posted in the next 2 weeks. For more information regarding disability insurance you can also refer to the information here. You can also visit the Canadian Pension Plan website for more detailed information.