The Covid pandemic further amplifies the financial discrimination that singles never married, no children (also includes divorced/separated) face even in death (CPP death benefit) (CPP INCREASE FOR WIDOWS APRIL FOOL’S JOKE). One saving grace, if one can call it that, is that the young appear to be less afflicted by the Covid virus.
Canada Revenue Agency rules for receiving the Canada Pension Plan (CPP) death benefit reveal that the deceased must have made CPP contributions for at least: – one-third of the calendar years in their contributory period for the base CPP, but no less than 3 calendar years; or – 10 calendar years. It is difficult to determine how this is calculated but it appears that the estates of deceased persons meeting these requirements will receive a one time $2,500 death benefit which doesn’t even cover the cost of a funeral. Deceased persons with less than the equivalent of 10 CPP calendar years receive nothing? The $2,500 death benefit is not indexed to inflation. (The maximum contribution to the base CPP for employees in 2019 was $2,748.90 based on an earnings ceiling of $57,400. If singles contributed the maximum for ten years CPP contributions would total $27,489.00).
Further analysis of rules shows that deceased singles (especially those with incomes under $50,000 before the age of 30 or 35) will likely not even receive the $2,500 even though they have been employed and contributed to CPP since some young CPP contributors will likely not meet the 10 calendar year CPP contribution requirement. They also will likely not have been able to put aside money for savings (to cover their funeral costs) since they are likely paying off student loans and spending income on establishing themselves as young adults.
Singles deceased after the age of 30 to 35 with over ten years employment may probably receive the $2,500 death benefit but this still doesn’t cover the cost of a funeral.
So how do singles, who have been personally responsible by being employed, pay for their funerals which can cost between $6,000 to $10,000? Many immediate family members, especially those with low incomes, would have great difficulty paying for this.
The question then remains: what happens to the CPP contributions paid by singles above and beyond $2,500? Answer: Contributions would remain in the CPP ‘pot’ to be probably primarily used by the married and widowed regardless of age. Examination reveals that the widowed under the age of 35 now may be eligible for CPP survivor benefits since the rules have recently changed to include these individuals. The amount they will receive depends on how much, and for how long, the deceased contributor has paid into CPP. Dependent children of the widowed are also eligible for CPP survivor benefits.
Over time with life span now decreasing instead of increasing, collapsing financial markets and the further increasing burden of CPP survivor benefits being placed on CPP resources, will the CPP plan be able to sustain itself? Will widowed also possibly receive extra 25 per cent survivor CPP benefits because Trudeau has sent out a trial balloon re this intent while singles receive nothing equivalent to this amount?
Analysis of the obituaries reveals there are many individuals who expire before the age of 85 through illness – cancer, heart and stroke, autoimmune diseases, flu, dementia, etc. Covid deaths can now be added to the list. Accidental deaths and homicides also need to be included. Young adults may decease from diseases like asthma and Type 1 diabetes.
Young adults who are deceased deserve to benefit from their CPP contributions just like widowed over and under the age of 65.
To eliminate the gross financial abuse of singles’ CPP contributions by the married (including the wealthy married), the financial formulas should be changed so that CPP survivor benefits are replaced with mandatory life insurance for the married/coupled (some employees do receive life insurance benefits if employed by companies providing this benefit). Since singles never married, no children can only be personally responsible to themselves they do not need life insurance. (Singles may purchase life insurance on a voluntary basis if they wish to financially assist someone close to them).
Mandatory life insurance should make the private sector very happy since it would promote private sector insurance businesses and stocks markets for the insurance industry. Mandatory life insurance for the married would mean they would take sole personal responsibility for their death benefits without robbing singles of their CPP contributions by ‘robbing from Peter to pay Paul’. This would mean that beyond the CPP death benefits CPP benefits would exclusively only be used for CPP retirement benefits.
It is a known fact that once benefits are introduced by politicians it is almost impossible to eliminate them for fear of loss of votes perpetuated by their own partisan greed (Liberal and Conservative). It is a known fact that the married will usually financially win over singles since singles as a minority have no voice and have no one to speak for them.
SOLUTION: Since we know the grifting of CPP survivor benefits where the married benefit the most will not change anytime soon it is imperative that financial abuse of singles CPP benefits be at least partially eliminated by increasing the CPP death benefit to at least $6,000 to cover the cost of funerals and be indexed just like widowed CPP survivor benefits are. Life insurance should be mandatory for married and common-law households instead of increasing CPP survivor benefits by twenty five per cent as has been trial ballooned by Prime Minister Justin Trudeau.
(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice – financialfairnessforsingles.ca).
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