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Flat-rate CPP death benefit panned as insufficient to cover funeral costs

Flat-rate CPP death benefit panned as insufficient to cover funeral costs
From CBC - December 16, 2017

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 $3,580back 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 did not agree. And now there are creeping concerns the decision will mean more people wo not be able to afford a funeral, which costs an average $6,000.

"It does not 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."

Boost for low-income contributors

A spokesperson 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.

Poverty rising among elderly

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