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At age 60, about 40 per cent of Canadians don’t have a common-law partner or spouse (39 per cent of men are single, and 41 per cent of women).

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Census data tells us that an increasing number of Canadians are living alone, without a common-law partner or spouse, at all stages of life – including retirement.

This finding is backed up by Canada Pension Plan (CPP) statistics which estimate that at age 60, about 40 per cent of Canadians don't have a common-law partner or spouse (39 per cent of men are single, and 41 per cent of women). At 70, CPP estimates that 32 per cent of men and 47 per cent of women are single.

If you are the spouse or common-law partner of someone receiving a CPP retirement pension, you may be eligible for a survivor pension if they die before you, up to 60 per cent of your partner or spouse's pension. The calculation is complex, and uses a formula that takes into account whether you are also receiving a CPP retirement pension, as well as the age at which your spouse started taking their own pension.

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The estate of the deceased CPP contributor is also entitled to a one-time, taxable death benefit that is equal to six months of their CPP pension, to a maximum of $2,500.

What does CPP pay if you die without a spouse?

When a single person who is receiving a CPP pension dies, the plan pays out only the death benefit – as there's no partner to receive a survivor pension.

As a result, the difference between what a single CPP contributor who dies gets out of the plan, compared with a partnered CPP contributor who dies, can be tens of thousands of dollars.

"The current average CPP retirement pension is about $650 per month, or $7,800 per year," comments Lea Koiv, a chartered professional accountant and Toronto-based specialist in retirement, estate and pension matters.

"Assuming that the recipient of the survivor pension has a 60-per-cent survivor benefit, which not all do, they would receive $390 per month, or $4,680 per year – adjusted for inflation and guaranteed for life."

Ms. Koiv gives the example of Joe (or Jill), a single 60-year-old Canadian who paid the maximum into CPP over their working life. Starting in 1975 when they turn 18, taking into account changes in contribution rates over time, and assuming a death on Jan. 1, 2017, Ms. Koiv calculates they paid a total of $47,357.70 into CPP over the 42 years from 18 to 60 (see table at bottom). Their contributions are matched by their employer, for a total of $94,715.40 paid into CPP.

"Then, if Joe or Jill dies after making these contributions and before taking any CPP pension income, what they get out of the plan is limited to the $2,500 death benefit – or just about what they pay in their final year of contributions," she comments. "The surplus dollars they contribute beyond the death benefit go right back into the pot to subsidize other Canadians."

The result, Ms. Koiv says, is that CPP is best thought of as an insurance plan, not as a true pension – despite its name.

Concept of 'singlism' on the rise in Canada

Nora Spinks, chief executive officer of the Vanier Institute of the Family, an independent national research and educational non-profit organization, says the concept of "singlism" – discrimination against single people – is increasing in awareness as the proportion of people living without partners in Canada climbs.

She adds that Canada "hasn't adjusted for, or adapted to, the new reality of singlehood. We're seeing a population today that is changing much more quickly than public policy – and it takes time for governments to catch up."

The question for Ms. Spinks is "how can we modernize programs and policies to reflect how families are changing, without giving up all that we gain from them?"

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In recent years, awareness of how singles and couples may be treated differently under CPP may be on the rise. In Nova Scotia, unmarried sisters who live together have lobbied their MP to request that whoever survives the other be entitled to a portion of their CPP benefits.

In the meantime, Ms. Koiv notes that the potential inequities in CPP between single and partnered pensioners may also be on the rise, as the amount that Canadians will pay into CPP is rising as a result of CPP reform while the death benefit has been frozen since 1998 at a maximum of $2,500.

Alexandra Macqueen, CFP, teaches and writes about finance in Toronto. She is co-author, with Moshe Milevsky, of Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income For Life. You can follow her on Twitter at @MoneyGal.

Joe or Jill’s lifetime CPP contribution rates

A 60-year-old Canadian who paid the maximum into CPP over their working life

YearCPP Contribution Rate (percentage of pensionable earnings paid into CPP)
1975 – 19861.8 per cent of pensionable earnings
1987 – 1996Contribution rate increases by 0.10 per cent each year, from 1.90 per cent 1987 to 2.8 per cent in 1996
1997 – 2002Contribution rate increases each year from 3.0 per cent in 1997 to 4.70 per cent in 2002
2003 – present4.95 per cent of pensionable earnings

Calculations by Lea Koiv, CPA, using data from Service Canada and Canadian Pension and Retirement Income Planning by Willis Towers Watson.

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