One of the most important things you can do in planning your estate is ensuring that you have the right beneficiary listed for your Staff Pension Plan benefit. Since the benefit could be substantial, it is important that you consider your decision carefully.
You may have designated a beneficiary when you first joined the SPP; however, years may have passed and the beneficiary that you have on file now may not be the beneficiary that you would like to receive the death benefit. For example, you may have changed your marital status, started or added to your family, or have a charity that you like to include as a beneficiary.
What is a beneficiary?
A beneficiary is the recipient of your pension benefit in the event that you die before retirement. A beneficiary can be one or more living individuals, a charitable entity, your estate, or any combination thereof. By deliberately naming one or more beneficiaries on your file, you are being clear about exactly how you want your death benefit paid out.
Who can I name as a beneficiary?
If you have a spouse, pension legislation states that your spouse is entitled to your pension benefit if you die before you retire. Your spouse may choose to receive the pre-retirement death benefit in the form of a pension from the Plan, or to transfer the lump sum value to a locked-in RRSP.
Your spouse may waive entitlement to a pre-retirement death benefit by completing and signing a Spousal Waiver of Pre-Retirement Death Benefit form. This document must be on file with the Pension Administration Office prior to your death. If your spouse has waived their entitlement, you may name one or more beneficiaries to receive this benefit.
If you do not have a spouse or your spouse waives their right to your pension benefit, you may name one or more living individuals, a charitable entity, your estate, or a combination as beneficiary. If no designation is made, your estate will be named as your beneficiary. If an individual is named, they must take the benefit as a cash lump sum and pay income tax on the entire amount. For this reason, it is a good idea to consider the tax consequences for the beneficiary. For example, if you have several siblings, it may be better to name all of them as beneficiaries rather than naming one sibling and asking them to share the benefit. By naming all your siblings and specifying the percentage to be paid to each one, you will reduce the tax implications for one individual.
Another way of dealing with taxes is to name your estate as beneficiary. By doing this, your estate deals with paying the taxes before money is distributed to those named as beneficiaries in your will. You should be aware, however, that probate fees will apply to the death benefit if it becomes part of your estate – something that does not happen if you name a beneficiary for the Plan.
Consider naming a Secondary Beneficiary
A secondary beneficiary receives your pre-retirement death benefit should both you and your spouse die. If you do not have a spouse, a secondary beneficiary would receive your pre-retirement death benefit if both you and your primary beneficiary die.
Where can I view my beneficiary information?
Sign in to myPension using your UBC Campus Wide Login and select the Beneficiary tab to view your beneficiary information. If you recently joined the Plan, myPension is typically available the month after your first contributions are made to the Plan.
How do I change my beneficiary information?
Changes in your life may occur that mean you may need to change your primary and/or secondary beneficiary on file. Please review Designating your Beneficiary for instructions on how to change your beneficiary information.
Recommended Resources
SPP Details: Naming a Beneficiary
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