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Pensions & Divorce/Separation in Ontario

How Are Pensions Affected by Property Division Laws?

Pensions are property under the Family Law Act, and are therefore included in a spouse’s net family property for the purposes of equalization.

The Family Law Act and the Pension Benefits Act were revised in 2012 to simplify the process of calculating and dividing the value of a person’s pension assets. Formerly, spouses would have to hire an actuary to determine the value of their pension assets. Now, that value is to be determined by the pension administrator.

As part of an equalization payment, courts can order a spouse to immediately transfer a lump sum out of his or her pension plan.

In determining whether or not such an order is appropriate, s. 10(4) of the Family Law Act specifies that the court will consider:

  • The nature of the assets available to each spouse at the time of the hearing.
  • The proportion of a spouse’s net family property that consists of the imputed value, for family law purposes, of his or her interest in the pension plan.
  • The liquidity of the lump sum in the hands of the spouse to whom it would be transferred.
  • Any contingent tax liabilities in respect of the lump sum that would be transferred.
  • The resources available to each spouse to meet his or her needs in retirement and the desirability of maintaining those resources.

If a spouse will receive the first installment of a pension on or before the valuation date, courts also have the power to order that payment to be divided.

Canada Pension Plan Credits

Canada Pension keeps a record of the contributions each person makes each year on their pensionable earnings under the Canada Pension Plan (CPP). The more pension contributions a person makes during their lifetime, the greater the government pension payout will be upon their retirement.

Pension contributions are referred to as “credits.” When married couples separate or divorce, the credits the spouses have accumulated over the course of their marriage are divided equally between them in a process referred to as “credit splitting.” If the spouses’ earnings during the marriage were equivalent, there will be no credits to split. But the greater the income disparity over the course of the marriage, and the longer the marriage, the greater the difference will be between their pension contributions during the marriage. The spouse with the greater contribution will then split his or her credits with the other spouse.

For married couples, this splitting of Canada Pension credits is mandatory, unless the spouses have a separation agreement that provides otherwise. For common-law couples, the split is not mandatory, but either spouse can apply to have their credits split. That application can only be made after the spouses have been separated for one year, but must be made within four years of separation.

To find out how your pension may be affected, or if you may be entitled to a portion of your spouse’s pension, call (905) 581-7222. Our Ontario family lawyers can advise you of your rights, responsibilities, and legal options.

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    Andrew Feldstein

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    Andrew Feldstein graduated from Osgoode Hall Law School in 1992. Prior to focusing exclusively on family law, Andrew’s legal practice covered many different areas, including corporate commercial. One of Andrew’s fundamental objectives is to achieve those goals mutually and collaboratively, as set out by him and his client.

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    Deleta Grandy obtained her Bachelor of Arts in Legal Studies at the University of Ontario Institute of Technology in 2012, where she graduated with Honours. She completed her legal studies at Western Law School, graduating with a Juris Doctor in 2016.

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    Jeff Hart

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    Jeff obtained his Honours Bachelor of Arts degree in Classical Studies from McMaster University before attending law school at Queen’s.

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    Location: Markham Daphna Schwartz joined Feldstein Family Law Group, P.C. in 2007 as an associate lawyer. She was previously ...
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    Nick Slinko

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    Location: Vaughan Nick Slinko attended York University from 2003 until 2007 where he majored in both Law & Society and ...
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    Anna Troitschanski joined the team at Feldstein Family Law Group, P.C. in 2012. Prior to that, she practised Family Law at a boutique Newmarket firm. Her experience covers all areas of divorce and family law, including custody and access, child support, spousal support, and division of property.
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    Veronica Yeung joined the Feldstein Family Law Group, P.C. as a summer student in 2014 and returned as an articling student in 2015. Following her call to the Ontario Bar in June 2016, Veronica was welcomed to the team as an associate lawyer.

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    Shana joined Feldstein Family Law Group P.C. as an articling student in 2017. Following her call to the Ontario Bar in June 2018, Shana was welcomed back to the firm as an associate. While completing her articles, Shana assisted with legal matters covering all areas of family law.

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    Shazia Hafiji joined Feldstein Family Law Group P.C. as a summer student in 2016 and returned as an articling student in 2017. Following her Call to the Ontario Bar in 2018, Shazia returned to the firm as an associate lawyer.

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    Lucy D'Ercole

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    Lucy D’Ercole joined Feldstein Family Law Group P.C. as a summer student in 2017 and returned as an articling student in 2018, during which she gained valuable experience in all areas of family law. Following her call to the Ontario Bar in 2019, Lucy was welcomed back to the firm as an associate lawyer.
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    Joy Pura completed her legal studies and obtained a Juris Doctor at the University of Ottawa. Prior to that, she completed ...
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