WHAT ARE MY RIGHTS TO SHARING MY SPOUSE’S PENSION?
A pension is considered an asset when dividing property between spouses. It is vitally important to know your rights with respect to pension entitlement. In many relationships the pension credits and the value of the equity in the matrimonial home are the two largest assets by way of real savings. They are critical assets with respect to generating an income stream in the retirement phase of most people’s lives.
Too often, pension obligations and pension entitlements are overlooked in both common-law and marriage situations. Pension entitlements in all marriages and some common-law relationships are just like savings accounts in banks. They are valued on the date of separation and are subject to pension-splitting formulas which reflect the duration of the marriage or common-law relationship.
The actual details of pension-sharing vary from province to province, but generally share the following structure. In common-law relationships, a Superior Court of the Province has jurisdiction to make an Order affecting division of assets, including pensions.
Common-Law Spouses
Entitlement to pensions for common-law spouses is much more uncertain. Property division of all kinds is more complicated and generally more difficult to obtain when you are not the registered owner of an asset. That would include other assets like a house, but certainly includes the pension credits.
Some plans recognize common-law periods of cohabitation in their definitions; other plans do not. You would need to check the definitions of each plan, and check the applicable Provincial or Federal Statutes and Regulations.
Pension-sharing is not an automatic entitlement in common-law or marriage relationships. Should the pension-earning spouse seek to disagree with sharing the pension credits, legal advice should be sought as soon as possible after a separation. A court application may be necessary if a separation agreement cannot be negotiated.
Married Spouses
Most pension plans will provide that married spouses are entitled to share in their spouse’s pension — 50% of the pension credits are available to the non-pension-earning spouse.
When there has been a period of cohabitation as common-law spouses prior to a marriage, entitlement to a share in that portion of a spouse’s pension is less certain. You should check with the Plan Administrator and/or lawyer, in each case, if this issue is uncertain.
Many spouses assume that they can make a claim against their partner’s pension, but do not realize that there has to be:
1. a signed separation agreement, or
2. in the alternative, a court order. Court orders can be made without huge cost, after negotiation or through mediation.
R.R.S.P.s
Regardless of whose name R.R.S.P. assets are registered under at the date of separation, these pension assets are subject to division for the period of marriage / cohabitation.
Canada Pension Plan
Everybody needs to know that there are provisions under the “Canada Pension Plan” for credit splitting. If your relationship ended in divorce or separation after January 1, 1987, you may be entitled to divide Canada Pension Plan credits equally with your former legal or common-law spouse.
Credit splitting can be simple when separated spouses agree; or it can be complicated and difficult, if ex-spouses disagree over pension splitting. It is best to know your rights and responsibilities early in a relationship and to talk about these issues. There are many sources of information available, including the following websites: