OMERS Death Benefits Explained for Members and Their Families

What happens to an OMERS pension at death depends heavily on timing. The rules are different when a member dies before starting the pension than when someone dies after retirement. Who survives the member also determines the form of benefit payable. When an OMERS member dies, benefits may go to an eligible spouse, dependent children, designated beneficiaries or the member’s estate. A spouse generally has priority. Before retirement, a spouse may have a choice between a survivor pension and the pension’s commuted value. After retirement, an eligible spouse generally receives a lifetime survivor pension.

Who Has Priority for OMERS Survivor Benefits?

An eligible legal or common-law spouse is generally first in line for survivor benefits, provided the spouses were not living separate and apart at the relevant time and the spouse has not waived the applicable entitlement. The relevant date changes depending on whether the member had started receiving the pension.

Dependent children can also qualify. For OMERS purposes, this can include a dependent child who is 18 or younger, a full-time student under 25, or a child who meets the plan’s definition of total disability. If there is no eligible spouse or dependent child, designated beneficiaries may receive benefits that would otherwise be payable to them. With no qualifying designated beneficiary, those amounts go to the estate. The complete hierarchy is set out in the OMERS survivor benefit rules.

A beneficiary designation therefore does not generally allow a member to bypass an eligible spouse’s statutory priority. Keeping beneficiary and spousal information current can still prevent unnecessary complications when OMERS determines who should receive the remaining benefits.

What Happens If an OMERS Member Dies Before Starting the Pension?

For the post-1986 benefits described under the current OMERS survivor rules, an eligible spouse can choose between an immediate survivor pension and the commuted value of the member’s pension. The survivor pension equals 66 2/3% of the unreduced lifetime pension the member had earned and continues for the spouse’s lifetime, including if the spouse later remarries.

Choosing the commuted value produces a different result. The spouse can receive the amount as a taxable lump sum or transfer it to an RRSP. Where dependent children also survive the member, choosing the commuted value means no separate benefit is payable to those children.

This distinction can be particularly important when someone dies while holding an OMERS deferred pension. Deferring retirement does not eliminate the pension’s survivor protection simply because monthly pension payments have not begun.

What Can Dependent Children Receive?

When an eligible spouse receives a survivor pension and dependent children also qualify, an additional pension of up to 10% of the member’s lifetime pension for each eligible child can be paid to the child’s guardian. The combined survivor pensions cannot exceed 100% of the member’s lifetime pension.

If there is no eligible spouse, qualifying dependent children instead share an immediate survivor pension equal to 66 2/3% of the member’s lifetime pension. The amount is divided equally, then redistributed among the remaining eligible children as individual children cease to qualify.

A child aged 18 to 24 who qualifies through full-time education must continue meeting the student requirement. OMERS requires annual confirmation of full-time attendance.

What Happens If the Member Dies After Retirement?

Once an OMERS pension has started, the spouse entitled to the survivor pension is generally the spouse the member had on the date the pension began. For members who retired after December 31, 1987, that person’s entitlement continues even if the relationship later ends, unless the spouse formally waives the entitlement or dies. If there was no spouse at retirement, or that spouse later dies, the eligible spouse at the member’s death can qualify instead.

An eligible surviving spouse receives 66 2/3% of the lifetime pension the retired member was receiving. It is paid monthly for the survivor’s lifetime and continues if the survivor remarries.

This rule is worth considering alongside what can happen to an OMERS pension after divorce. A relationship ending after retirement does not by itself transfer survivor-pension entitlement from the retirement-date spouse to a later partner.

Does the Survivor Pension Include the OMERS Bridge Benefit?

The survivor pension is based on the member’s lifetime pension, which does not include the temporary bridge benefit. Inflation protection, however, forms part of the lifetime pension used for survivor purposes.

That distinction matters when a member dies while receiving both components before age 65. The surviving spouse should not expect 66 2/3% of the member’s entire final monthly deposit. The temporary OMERS bridge benefit is excluded from the lifetime pension on which the survivor amount is based.

What Do Beneficiaries Receive If There Is No Spouse or Dependent Child?

Before retirement, designated beneficiaries receive the commuted value of the pension when there is no eligible spouse or dependent child. Any applicable 50% rule refund is added, and the payment is made as a taxable lump sum. If there are no designated beneficiaries, the estate receives the amount instead.

The result changes after pension payments have begun. Beneficiaries do not receive an ongoing survivor pension simply because they were named by the member. Instead, they or the estate may qualify for a residual refund after the eligible survivor benefits have ended. OMERS notes that a residual refund is unlikely once pension payments to the member and survivors have continued for about five years.

This is one reason a beneficiary should not be confused with a spouse entitled to a survivor pension. The two positions can carry substantially different rights.

What Should Survivors Do After an OMERS Member Dies?

If the member was still working for an OMERS employer, the employer reports the death to OMERS. In other circumstances, survivors should contact OMERS so the claim can be assessed. OMERS then requires a Survivor Options Form and documents supporting the death and each survivor’s eligibility.

Acceptable proof of death can include a provincial death certificate, funeral director’s statement of death or certain estate documents. A common-law spouse may need additional evidence establishing the relationship for the required period. The OMERS survivor claim requirements explain the documentation used for spouses, children, beneficiaries and estates.

Because the benefit can depend on information recorded long before death, we would not leave beneficiary records for an executor to sort out later. Only the member can add or change designated beneficiaries. An executor, power of attorney, estate trustee or survivor cannot make a new beneficiary designation after the member dies.

Other Questions About OMERS Death Benefits

What happens to an OMERS AVC account when the member dies?

Additional Voluntary Contributions (AVCs) follow separate survivor rules from the defined benefit pension. The remaining account balance goes first to an eligible spouse, then to designated beneficiaries when there is no spouse, or to the estate when neither exists. The OMERS AVC survivor rules provide the separate treatment for these accounts.

Does receiving CPP survivor benefits reduce an OMERS survivor pension?

CPP survivor benefits do not reduce the OMERS survivor pension. Eligibility for the two benefits is determined separately.

Can a spouse waive OMERS survivor benefits?

An eligible spouse can formally waive certain survivor entitlements using the applicable prescribed form. Different waiver forms apply to a pre-retirement death benefit and a joint-and-survivor pension after retirement.

What happens when the surviving spouse later dies?

The spouse’s OMERS survivor pension stops at death. If eligible dependent children remain, benefits may continue for them. OMERS also determines whether any residual refund remains for the beneficiary originally designated by the member.