How can I leave my pension to the person I choose?

father and son

Whether pension payments can be left by will to another person depends on the type of pension plan. The rules differ depending on whether the pension is paid from a private pension plan, such as an employment pension, or a public pension plan such as the Canadian Pension Plan (CPP).

Canada Pension Plan

Survivor’s Pension

The CPP survivor’s pension is paid to the individual who, at the time of death, is the legal spouse or common-law partner of the deceased contributor. The amount received by the surviving spouse or common-law partner will depend on the following factors:

  • Whether the deceased contributor is also a recipient of CPP disability benefit or retirement pension;
  • The survivor’s age; and
  • How much, and for how long, the deceased contributor paid into the CPP.

It is the responsibility of the surviving spouse or common-law partner to apply for the survivor’s pension. Eligible individuals should apply as soon as possible after the contributor’s death, since delays may result in a loss of benefits. The CPP will only make back payments for up to 12 months, which means that any further delays will result in lost benefits. At the earliest, a survivor’s pension will begin one month after the contributor’s death.

Death Benefit

The CPP death benefit is a one-time, lump sum payment to the estate on behalf of the deceased contributor. If the deceased leaves an estate, the executor is responsible for applying for the death benefit. If no estate exists, or the executor has not submitted an application, payment may be made to other persons who apply for the benefit in the following order of priority:

  1. The person or institution that has paid for, or is responsible for the funeral expenses of the deceased;
  2. The surviving spouse or common-law partner; and
  3. The next-of-kin of the deceased.

Children’s Benefit

The CPP children’s benefits provides monthly payments to dependent children of a deceased CPP contributor. In order to be eligible for this benefit, the child must be either:

  • Under the age of 18; or
  • Between the ages of 18 and 25, and attending a recognized school or university on a full-time basis.

Private Pension Plans

A successor annuitant is a person who collects the benefits of a pension. Generally, the ability to appoint a successor annuitant depends on the type of pension plan. Often, such plans will permit pensioners to appoint a specific individual as their successor annuitant. However, in some jurisdictions, you may be permitted to only name your spouse as a successor. In addition, plans may also permit a pensioner to designate an individual as a “beneficiary” rather than a successor annuitant, in which case, the slightly different rules will apply.

For further information about leaving your pension to a specified individual, please consult a TEP and, if applicable, your pension benefits contact at your employer.

Disclaimer

An article of this kind can never provide a complete guide to the law in these areas, which may be subject to change from time to time. The opinions and suggestions made within this article should not be interpreted as specific advice in relation to any particular individual or individuals. Neither STEP, the article author or their firm accept responsibility for any loss occasioned by someone acting or refraining to act on the basis of the opinions and suggestions contained in this article. More