The Rural Voice, 1999-06, Page 57Guest Column
How will CPP affect your estate?
By Dael Bierworth
OMAFRA Business Management
Specialist
When writing a will or making a
plan to transfer assets to the next
generation, don't forget the benefits
that will be available from the
Canada Pension Plan. All individuals
earning income from employment as
well as self-employed, contribute to
the plan.
Upon the death of a subscriber,
three options for benefits are
available.
1) A lump sum payment is available
payable to the estate or surviving
spouse, to help offset funeral
expenses.
2) A monthly pension is available to
the surviving spouse (husband or
wife).
3) A monthly pension is available to
dependent children.
To be a subscriber and qualify for
benefits, you must contribute for at
least one third of the qualifying
period, or one-third of the calendar
years for which you are required to
contribute to the plan, or 10 calendar
years, whichever is less. In no case
can the minimum be less than three
years.
Instructions should be left to your
personal representative to consider
these potential benefits, to see which
may apply and be payable in your
situation.
Lump Sum Death Benefit: The size
of the lump sum payment will depend
on the amount contributed. The
amount is calculated as six (6) times
•
the monthly pension you would
receive. In 1996, the maximum
amount available was $3,540.
Survivor Benefits: If ybu are
survived by a spouse, he or she may
be eligible for a survivor's pension.
The deceased person must have
contributed for the minimum
contributory
period as
mentioned
above. The
precise amount
of the monthly
pension depends
on a number of
factors,
including the
amount of
actual
contributions,
the age of the
applicant and
the number of
dependent
children who survive.
The plan includes regulations on
entitlements for the survivor's
pension, in situations where the
spouse remarries or the husband and
wife separated or were divorced prior
to death. The surviving spouse can be
a legal or common law spouse. In the
case of a divorce from a deceased
contributor, the spouse is not entitled
to a pension. The maximum benefit
in 1996 was $399.70 per month.
Benefits for Dependent Children:
To be eligible for the benefits
payment for dependents, the child
must be unmarried. Natural and/or
Canada
Pension Plan is
much more
than just
a retirement
plan
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adopted children under the age of 18,
or between 18 and 25 qualify if
attending school or university full
time. When payments are paid
beyond 18 they are made directly to
the child. The amount of monthly
benefit in 1996 was $164.17. A child
can receive two benefit payments if
both parents are deceased and were
CPP contributors.
Retirement Benefits: Full benefits
are provided to participants at age 65.
These are calculated by the years and
amount of contribution. The
maximum pension at this age in 1996
was $727.08 per month or $8,725
yearly.
Disability Benefits: A disability
pension is provided to participants
who are unable to work due to a
severe and prolonged physical or
mental condition. These pensions are
payable until age 65, when they are
converted to retirement pensions or
until recovery from the disability.
The 1996 maximum monthly benefit
was $870.92. A disabled cont-
ributor's child qualifies for benefits,
while the contributor is receiving
benefits. The child must be under 18
or between 18 - 25 if attending
school. The maximum payment is
$164.17 per child per month.
All figures for payment are quoted
for 1996. These figures are adjusted
or indexed to reflect inflation.
The Canada Pension Plan is a
useful supplement for those
experiencing disability and survivors
of a contributor. These funds are an
asset when considering our
responsibility for families and should
be an integrated part of the planning
process for estate planning and
drafting a will.
For more information on the
Canada Pension Plan, visit their
website at http://www.cpp-rpc.gc.ca
or call 1-800-277-9914. The mailing
address is CPP, P.O. Box 5100.
Postal Station D, Scarborough. ON,
MIR 5C8.
Note: Benefits will not be sent
automatically. Applications must be
made in each situation in order to
receive benefits.°
JUNE 1999 53