How to improve the death benefit without increasing funeral costs?
If it increases the death benefit, the government will have to impose safeguards on funeral businesses to stabilize prices, warn actors in the funeral industry.
The average funeral cost is between $4,500 and $7,500, according to the Corporation des thanatologues du Québec.
During the next budget , Finance Minister Eric Girard will announce whether he is going ahead with the increase in the death benefit, which has been capped at $2,500 since 1997.
A third of families rely solely on the death benefit to pay funeral expenses, argued the Corporation des Thanatologues du Québec during consultations on the Quebec Pension Plan.
To avoid their indebtedness, the CTQ urges the government to increase the benefit to $5,866 and index it thereafter, in order to restore adequate financial support. An improvement was also requested by the Conseil du statut de la femme, the FADOQ and the CSN during the consultations.
In 1996, the maximum death benefit was $3540, but the average payout was $2571. The following year, the benefit was set at a single amount of $2,500, taxable, for all eligible contributors.
According to the CTQ, the average funeral costs are between $4,500 and $7,500. The current death benefit only pays for the minimum, i.e. the body treatment process, direct cremation and return of the ashes to the family. To help the family during this difficult time, the corporation is suggesting a mechanism to allow families to designate the funeral home as the agent and beneficiary of the death benefit.
The government says it is sensitive to the plight of families going through bereavement. Helping them, if necessary, must however be done within the limits of the leeway available to the regime, or $400 million per year, we are told behind the scenes.
Retraite Québec estimates the cost of the increase suggested by the CTQ at $358 million per year.
This is without counting the other proposals in the viewfinder of the Minister of Finance, such as the optional contribution for retirees aged 65 and over who return to the labor market. Making it optional would alone cost half of the government's financial leeway, Minister Girard concluded during the debate on the report resulting from the commission.
80% of funeral homes in Quebec are small organizations practicing barely 100 deaths per year.
The government would be misguided to respond favorably to the request of the CTQ, explains for his part the president of the Federation of funeral cooperatives of Quebec. Alain Leclerc believes that an improvement in the death benefit is necessary, but that it should be injected into the pockets of families and not through funeral companies.
He maintains that there should be safeguards to prevent a possible bonus from ultimately leading to an increase in funeral costs.
“Because the state gives $2,500 for a funeral, the majority of funeral companies offer a $2,500 product. »
— Alain Leclerc, president of the Fédération des cooperatives funéraires du Québec
Sérénia funeral broker also fears that companies will increase their prices in the event of an increase in the service. He recalls that the funeral home sector has become more and more consolidated since the 1990s. Large American and Canadian companies have taken part in the market.
The Federation of Funeral Cooperatives, for example, estimates at 10% the rate of deaths treated each year by Service Corporation International, one of the largest multinationals in the funeral field. Often large groups do not tend to negotiate. Prices are often higher there, says broker Marc Légaré. He advocates an increase in the benefit to help families.
“How much to raise it?” There is the question. Perhaps the requests that have been made to date are a little overpowering. »
— Marc Légaré, president Sérénia funeral broker
In the term "funeral business", there is the term "business", retorts the Corporation of thanatologists of Quebec. She recalls that these companies receive no subsidies and that inflation is attacking the profitability of companies. In addition, 80% of funeral homes in Quebec are small organizations with barely 100 deaths per year.
However, several funeral homes find themselves in a monopoly situation, argues the Federation of Cooperatives. According to one of his studies, in 2019, thirteen of the 60 cities in Quebec with more than 100 deaths per year had only one funeral home to cover the territory. And 31 cities had only two.
To help families, the Federation of Funeral Cooperatives of Quebec suggests instead making the death benefit non-taxable. An idea also supported by the Corporation of Thanatologists. Currently, the death benefit of $2,500 is reduced by an average of $775 after taxes, estimates the CTQ.