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Benefits for Retired Members
June 2011 - Section 11

Supplementary Death Benefit

The Supplementary Death Benefit Plan (SDB) provides a form of decreasing term life insurance. Contributors to the pension plan, with the exception of employees of certain Public Service Corporations, participate in the SDB Plan. Most SDB participants are eligible to continue coverage after ceasing to be employed. There is no requirement to pass a medical fitness test to continue SDB coverage.

Participants Entitled to an Immediate Pension

This subsection is for pensioners participating in the SDB Plan who, at retirement, were entitled to an immediate pension, including individuals who became entitled to a pension within 30 days after retirement.

Your full death benefit coverage automatically continues if you have been employed in the public service without interruption for two years, or have been a participant in the SDB Plan for two years. No action on your part is required to continue this coverage. (If you retired prior to September 14, 1999 with an entitlement to an annual allowance, you had to complete an election in order to continue SDB coverage after retirement.)

The SDB "basic benefit" is two times the final annual salary rounded up to the next $1,000 if not a multiple of $1,000. For example, an employee's final salary is $40,001; the SDB salary would be $81,000 ($40,001 × 2 = $80,002 rounded to the next $1,000). The monthly premium rate is 15 cents per $1,000 of coverage, the same as the rate paid by employees. This rate applies to participants of all ages.

At age 65, $10,000 of your coverage will be free for life. You will only have to pay premiums on the balance. Beginning at age 66, coverage decreases by one tenth of the original amount each year, although it will never fall below $10,000.

The reduction takes effect on April 1 or October 1, whichever date comes first after your 66th birthday and every year thereafter until you reach age 75. As the coverage decreases each year, there is a corresponding reduction in the monthly premium.

Thirty-one days following your retirement or any time thereafter, you may choose to reduce your coverage to $10,000, or cancel your coverage. The decision once made is irrevocable, and you may not later restore the full coverage. If you are interested in these options, please write to the Pension Centre (see Section 1) for more details.


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Participants Not Entitled to an Immediate Pension

Those persons who have chosen a deferred annuity payable at age 60, or an annual allowance payable starting more than 30 days after retirement, must elect if they wish to continue their participation in the SDB Plan. These participants pay a higher premium rate based on age at retirement. In addition, there is no $10,000 paid-up coverage at age 65. After age 66 coverage decreases by one tenth of the original amount each year. All coverage ends at age 75. The deadline to elect to continue as a participant is 30 days after ceasing to be employed.

Option to Retain Former Coverage

When plan improvements were introduced in 1999, certain participants could choose to have the 10% annual reduction start at age 61, or to have minimum coverage of $5,000. Those participants who made one of these options will have their coverage determined on that basis.

Designating a Beneficiary

You may name the beneficiary of your SDB by completing the form "Naming or Substitution of a Beneficiary" (PWGSC-TPSGC 2196). You can obtain this form by contacting the Pension Centre (see Section 1). Your beneficiary may be:

  1. your estate;
  2. any person over age 18 on the date of the naming;
  3. any charitable organization or institution;
  4. any benevolent organization or institution; or
  5. any religious, educational or other such organization which is dependent on grants.

Your beneficiary must be over age 18 at the time of naming, or the designation will be considered invalid and the benefit will be paid as though you had not named a beneficiary. As well, the original completed beneficiary form must be received by the Pension Centre prior to your death to be considered valid.

In addition to the SDB, the following amounts may be payable to your designated beneficiary if there is either no survivor or child to whom continuing pension benefits may be paid:

  1. monthly pension payments owing but not paid at the time of your death, and
  2. any minimum benefit. This only applies to your situation if you were a contributor on or after December 20, 1975. The minimum benefit is explained in Section 13.

To change your beneficiary, you must submit a new designation form. Even in the event of divorce, a designation remains valid if unchanged. You are responsible to ensure that the designation reflects your current situation. The provisions of Wills, Agreements or Court Orders never determine the person to whom the benefit is payable.

You may name only one beneficiary at a time. To divide the benefit, you may wish to name your estate as beneficiary and have the benefit distributed in accordance with the terms of your will.

Your estate will be the recipient of your SDB if you choose not to name a beneficiary or if your designation is not valid. The only exception to this applies to male public service pension plan members who were participants in the SDB Plan and were also married before December 20, 1975. In such cases, if no beneficiary has been named and if the woman who was his spouse prior to that date survives him, the benefit is payable to her as the widow.

To ensure that we can locate your beneficiary at the time of your death, please continue to provide us with the current address of your beneficiary. If your beneficiary predeceases you, you should name a new beneficiary. If you do not complete a new designation form, the benefit will be paid to your estate.

Remember, to be valid your beneficiary designation form must be signed, dated, and witnessed and it must be received by the Pension Centre prior to your death. You should note that your witness cannot be your beneficiary.

Information about the payment of the death benefit is given in Section 12 - Survivor and Child Benefits.