What Happens to Your Pension When You Die?

Pensions In The Event Of Death

When someone dies, what happens to their pension depends on the type of pension they had and whether they had a spouse, beneficiary, or estate listed. In Canada, different rules apply to government pensions, workplace pensions, and private annuities.

‍

Government Pensions

Canada Pension Plan (CPP)

• Death Benefit: A one-time payment (up to $2,500) made to the estate or person responsible for final expenses.
  
  
• Survivor’s Pension: Monthly payments may go to a surviving spouse or common-law partner.
  
  
• Children’s Benefit: Dependent children under 18 (or up to 25 if in school) may receive monthly payments.
  
  

Old Age Security (OAS)

• OAS payments stop upon death — they are not transferable.
  
  
• However, Guaranteed Income Supplement (GIS) may continue temporarily for a low-income surviving spouse.
  
  

‍

Workplace Pensions

Defined Benefit (DB) Plans

• If the member dies before retirement, most plans offer a survivor benefit (usually to a spouse) or a refund of contributions.
  
  
• If the member dies after retirement, the payout depends on the pension option chosen:
  
  
  
  • Single life pension: Ends at death unless a guarantee period was included.
    
    
  • Joint and survivor pension: Continues a portion of the income to the spouse after death.
    
    

Defined Contribution (DC) Plans

• The account balance goes to the designated beneficiary or the estate.
  
  
• If no beneficiary is named, the funds become part of the estate and are subject to probate and taxes.
  
  

‍

Annuities

• Single life annuities stop when the person dies unless a guarantee period was selected.
  
  
• Joint life annuities continue payments to the surviving spouse.
  
  
• Some annuities may offer a lump-sum death benefit or refund of unused funds, depending on the terms.
  
  

‍

RRSPs and RRIFs

• RRSPs: Can be rolled over tax-free to a spouse, a dependent child, or a disabled child. Otherwise, they are taxed as income on the final return.
  
  
• RRIFs: Similar to RRSPs. A spouse can be named as a successor annuitant to continue receiving payments.
  
  

‍

Key Takeaways

• Pension outcomes after death vary by plan type and beneficiary status
  
  
• Having a named beneficiary ensures smoother, faster distribution
  
  
• Survivor benefits are common for spouses, but less so for other family members
  
  
• Review your pension and estate plans regularly to keep them up to date
  
  

‍

Common Questions

Q: Do pensions go to your children?
A: Not usually — unless they’re minor dependents or named as beneficiaries on certain accounts.

Q: Can my spouse keep getting my pension?
A: Yes, but only if the pension plan included a joint or survivor option or if you’ve named them as a beneficiary.

Q: What if no beneficiary is listed?
A: The pension value may go to your estate and could be subject to taxes and probate.