There’s a Limit to Retirement Benefits

If you’re receiving survivor benefits, you could be in for a nasty surprise when you begin collecting your government pension.


In the regular feature Your Questions, Olev Edur provides answers to questions from our readers regarding their rights, personal finance, and estate planning. Here’s one on survivor benefits and pension income:

Q.: With many retired single women living in poverty, it’s clear that pensions are not all created equal. My husband paid into Canada Pension Plan (CPP) from its inception until he passed away in 2008, at which time I began receiving $780 a month in survivor benefits. I also worked most of my adult life, and my own CPP pension entitlement was supposed to be $10,022.16 when I retired in 2017. However, when I retired I began receiving just $912.78 a month ($10.953.36 a year). When I asked why so much of my survivor benefits were taken away, I was told that CPP has a limit on how much can be paid to any one person and, as I now had my own pension, that was all I qualified for. Have your readers been informed about this restriction? I know my husband and I weren’t aware of it. Is there any solution?

A.: Unfortunately, the rules are the rules, and CPP regulations clearly state that the maximum amount any survivor aged 65-plus can receive in retirement and survivor benefits combined is the normal maximum retirement benefit for a single person, which for 2017 was $1,114.17 a month, or $13,370.04 a year. Beyond that, the plan’s administrators use a complex formula to determine exactly how much any individual survivors can receive, based on their own as well as their late partner’s entitlements, age, et cetera.

This is indeed a subject that has been covered quite a number of times in “Good Times”; we’ve received many letters from surviving readers in similar situations who were shocked to discover that they would be getting far less than expected when it came time to start collecting their own CPP retirement benefits. At present there is no solution. All you can do is complain to your Member of Parliament and hope that enough people complain that the government is prompted to make changes. Just don’t hold your breath awaiting relief—this rule has been in force for a long time and isn’t likely to be changed any time soon.

Photo: iStock/Squaredpixels.