What is the Canada Pension Plan death benefit?

The primary purpose of the Canada Pension Plan (CPP) is to pay a retirement pension to contributors. Employers as well as employed and self-employed Canadians contribute to the CPP and contributors are entitled to begin a CPP retirement pension as early as age 60.

There are several other programs that CPP contributors and family members are eligible for—including the CPP death benefit, Sam. 

A Quebec resident may be entitled to Quebec Pension Plan (QPP) benefits. The CPP and QPP plans have coordination agreements since some Canadians contribute to both plans during their career.

Other CPP/QPP programs

Some of the other CPP/QPP benefits include: 

• Disability benefits. These benefits are payable to eligible contributors who cannot work due to a disability. 
• Survivor’s pension. If your spouse or common-law partner dies, you may be eligible to receive a survivor’s pension. 
• Children’s benefits. A disabled or deceased contributor’s children under the age of 25 may be eligible to receive a monthly benefit. 

What is the CPP/QPP death benefit?

The CPP/QPP death benefit is payable to the estate or other eligible applicants on behalf of a deceased contributor. 

The CPP death benefit is a one-time payment from Service Canada. Qualification requires one of the following minimum criteria to be met:

• The deceased must have made contributions during at least one-third of the calendar years in their contributory period for the base CPP, but no less than 3 calendar years
• The deceased must have contributed for at least 10 calendar years

If the deceased was receiving a QPP retirement pension, last worked and contributed to the QPP, or lived in Quebec at the time of their death, an applicant must apply to Retraite Québec for a QPP death benefit instead of Service Canada for a CPP death benefit. 

How much is the CPP/QPP death benefit?

For many years, the maximum CPP death benefit was $2,500, but beginning January 1, 2025, there was an increase to the death benefit. It now consists of a basic amount of $2,500 and a possible top-up of $2,500, for a maximum $5,000 benefit. 

The top-up is payable if the deceased met both of the following conditions:

• Had never received a CPP or QPP benefit based on their own contributions
• Had no spouse or common-law partner eligible for a CPP survivor’s pension

These amounts may decrease if a social security agreement is needed to meet eligibility for people who have lived outside of Canada and contributed to foreign social security plans.

The maximum QPP death benefit remains at $2,500. 

How to apply for the CPP/QPP death benefit

You can apply online by signing into a My Service Canada Account (MSCA) and completing the online CPP Death Benefit form. You can also complete and submit the Application for CPP Death Benefit (form ISP1200) by mailing it to Service Canada. Quebec applicants can also apply online or by mail. 

If there is an estate, the executor named in the will or the administrator appointed by the court must apply. 

If there is no estate, or if the executor has not applied, there is an order of priority for applicants:

1. The person (or institution) who paid for the deceased’s funeral expenses
2. The surviving spouse or common-law partner
3. The next-of-kin of the deceased.

It generally takes between 6 and 12 weeks for the payment to be issued following receipt of the application by Service Canada or Retraite Québec. You should apply as soon as possible following a death. 

Is the CPP/QPP death benefit taxable?

The CPP/QPP death benefit is taxable. The income is reported on a T4A(P) tax slip, called Statement of Canada Pension Plan Benefits. QPP death benefits are reported on RL-2 slips for provincial tax purposes. 

The death benefit payment may be reported by the estate of the deceased on a T3 Trust Income Tax and Information Return (Trust Income Tax Return TP-646-V in Quebec). If it is paid or made payable to a beneficiary, they report it on their T1 Income Tax and Benefit Return (TP1 Income Tax Return in Quebec). 

If a trust return is not being filed, it is instead reported by the beneficiaries of the deceased contributor’s estate on their personal tax returns. 

Final words

The beneficiaries of most deceased CPP or QPP contributors will be entitled to a death benefit, as well as potential survivor benefits. The executor or family members should apply to Service Canada or Retraite Québec as soon as possible after the death to ensure prompt payment.

Read more from Ask a Planner:

• Retirement taxes explained: Withholding, clawbacks, and other surprises
• Should you sell stocks you inherit?
• Insurance for self-employed Canadians: What coverage do you need?
• “We’re well off in retirement. How can we pay less tax?”

The post What is the Canada Pension Plan death benefit? appeared first on MoneySense.