Change to CPP death benefit panned as insufficient to cover funeral costs

Funeral Services Association of Canada lobbied governments to raise the value to $3,580

A change to the Canada Pension Plan to provide a flat-rate death benefit to help low-income families cover funeral costs falls short of what funeral homes say is needed to cover the cost of a final farewell.

After meetings this week, federal and provincial finance ministers set the death benefit at a flat $2,500, regardless of how long or how much someone had paid into CPP.

Leading up to the meeting, the Funeral Services Association of Canada lobbied governments to raise the value to $3,580 — back to what it was in 1997 before finance ministers of the day imposed a sliding scale benefit based on an individual’s contributions to the CPP, capped at a maximum benefit of $2,500.

The association also asked that the benefit be tied to inflation so its value would increase with the cost of living.

Finance ministers didn’t agree. And now there are creeping concerns the decision will mean more people won’t be able to afford a funeral, which costs an average $6,000.

“It doesn’t make sense,” association president Yves Berthiaume said.

“Government needs to look at it (the death benefit) a little more closely and how they want to deal respectfully with their citizens.”

READ MORE: Family needs help to bring home son’s remains

READ MORE: Fraser Health apologizes after releasing body to wrong funeral home

A spokeswoman for Finance Minister Bill Morneau said the change would increase benefits to the estates of lower-income contributors.

The death benefit would likely be worth $5,500 today had it not been capped two decades ago. At the time, officials worried the benefit would become financially unsustainable if its value increased annually with the maximum income covered by CPP premiums.

The funeral services association estimates the benefit has lost 38 per cent of its buying power over the past two decades due to inflation.

Conservative social development critic Karen Vecchio said the finance ministers’ decision runs counter to what stakeholders wanted and will force Canadians to not only find ways to save more for retirement, but for death as well.

Hassan Yussuff, president of the Canadian Labour Congress, said the flat-rate payment will ensure no one is denied the benefit because they didn’t contribute enough money for a long enough period of time. But he said he was at a loss to understand why the finance ministers didn’t do more.

“The numbers need to come up and we’ll have to put some effort to try and address that,” Yussuff said.

In the 2014-15 fiscal year, CPP death benefits totalled $312 million for about 139,000 people. One year later, payments totalled $347 million for about 150,000 people.

At the same time, a larger proportion of seniors are living beneath the poverty line: The most recent census figures showed 14.5 per cent of seniors living in poverty in 2015, an increase from the 12 per cent recorded in 2005.

That has meant Berthiaume sees 30 to 40 low-income families a year unable to pay for funeral services even with a combination of government and private benefits. Four decades ago, when he first started in the family business, Berthiaume said there were about five cases a year.

He said he and other funeral services in Canada regularly cover the shortfall out of their own pockets.

The death benefit is paid to an estate, executor named in a will or an administrator named by the court.

If no estate exists, or an executor hasn’t applied for the death benefit, the payment would go first to whoever covered funeral costs, then to the surviving spouse or common-law partner, and lastly next of kin — a priority list that causes bureaucratic headaches for a relatively small payment.

An undated document recently created by officials at Employment and Social Development Canada said the hierarchy creates “a complex administrative process” that causes ”delays in benefit payments.” The Canadian Press obtained a copy of the document under the access-to-information law.

Berthiaume’s association has asked governments to consider allowing families the option to direct the death benefit to licensed funeral service providers to offset costs. The association argues this would reduce administration costs.

Jordan Press, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Comments are closed

Just Posted

Andrea Senft elected board chair of Abbotsford Community Foundation

Senft has worked for school district for 12 years and sits on several community boards

Abbotsford Police hold summer geocaching event

Residents invited to discover city while finding hidden treasures

QUIZ: Put your knowledge of Canada to the test

How much do you know about our country?

Abbotsford celebrates Canada Day in a virtual way

Online activities include pet parade, performances and interactive play zones

UPDATE w/ VIDEO: Semi crashes through barriers east of Chilliwack on Highway 1

Emergency, Hydro crews dispatched as truck goes off the road in westbound lanes

‘This year is unlike any other’: Trudeau delivers Canada day address

Sophie Gregoire Trudeau and the Prime Minister release video celebrating the national holiday

Facing changes together: Your community, your journalists

New platform allows readers to make a one-time or ongoing donation to support local journalism

PHOTOS: Dual rallies take over Legislature lawn on Canada Day

Resist Canada 153 highlighted colonization and genocide, Unify the People called COVID a hoax

Gov. General honours Canadians for bravery, volunteer service

Five categories of winners presented on Canada Day

COVID-19: Should non-medical masks be mandatory in Canada?

New poll shows Canadians are divided on the rules around mandatory masks

Northbound lane of Coquihalla closed after vehicle incident near Hope

A northbound lane is closed just north of the Great Bear Snowshed, according to DriveBC

‘A little bit scary for everybody’: Air passengers wary as new rules take effect

Masks or face coverings have been mandatory on flights since April 20

VIDEO: Prince William and Kate chat with B.C. hospital staff about COVID-19

Seven-minute video posted to Youtube on Canada Day

Most Read