Pensions are a type of family property under the BC Family Law Act. That means your spouse may be entitled to a portion of your pension if your relationship has ended. It also means you may be entitled to a portion of your spouse’s pension on separation or divorce.
Pension division on divorce is complex
Your pension is likely one of your most significant assets—mistakes or misunderstanding of the law can cost you dearly. You should never agree to any division until you know what type of pension plan you have, how much it is worth for family law purposes, and the tax implications of how your pension will be divided (e.g., a lump sum cash payment vs. transfer to your spouse’s registered plan account). Read on for answers to some family law pension FAQs. But be warned: the rules for dividing pensions during divorce are complex, so you should get help from an experienced family lawyer to protect yourself.
What types of pensions are subject to division during a divorce?
A pension you earned during your relationship is family property and may be subject to division when the relationship ends. That includes any registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs” and “LIFs”), pensions earned through your employment (which can be a defined benefit plan or a defined contribution plan), and Canada Pension Plan (“CPP”) credits.
What portion of my pension needs to be divided?
In BC, the basic property division rule is this: when a relationship ends, spouses are entitled to an equal share of family property built up during their relationship, but each spouse gets to keep any property they brought into the relationship. So, the general rule is that the value of the pension benefits you earned during your relationship is family property and your spouse may be entitled to up to half of its value, while the portion of your pension earned prior to the relationship is not family property and not subject to division on divorce.
Do common law spouses have to divide their pension benefits on separation?
Yes. The BC Family Law Act (“FLA”) sections on division of family property and family debt apply to married spouses and to unmarried partners who have been living together in a marriage-like relationship for at least two years. Those sections of the FLA include the rules about dividing pensions, which means that common law spouses have the same rights and responsibilities as married spouses when it comes to pension entitlements.
Can my spouse and I agree to not share pension benefits?
Yes. You and your spouse may have made a prenuptial agreement or marriage contract that puts pensions off-limits or that sets out your agreement to something other than equal division of pensions on breakdown of the relationship. It is not too late if you and your spouse have already separated. You and your spouse can sign a separation agreement that waives entitlement to claims against pensions or that splits pension benefits in a way you both agree is fair. Your plan administrator/financial institution may have requirements and forms for a spouse to formally waive their right to a pension—talk to your family lawyer to find out what is required.
Is the BC Family Law Act the only law that applies to pensions?
Is the BC Family Law Act the only law that applies to pensions?
No. Part 6 of BC’s Family Law Act and the Regulations under the FLA set out rules for dividing pensions on separation or divorce, including procedures for valuing a pension. However, depending on your situation, it may also be necessary to look to other federal or provincial laws. For example, the Pension Benefits Standards Act applies to employment pensions registered in BC. If you work in a federally regulated industry and have a federal public service pension, Canada’s Pension Benefits Division Act will apply to division of pension benefits accumulated during your relationship.
Does it matter if my pension is not yet being paid?
Yes. The rules for dividing pensions depend on the type of pension plan you have, and on whether or not you have started to collect your pension. Another factor is whether or not your spouse has retired. Deciding what is fair can get complicated fast. You should talk to a divorce lawyer about how the law applies in your specific situation.
Dick Byl Law Corporation is here to help
You want to protect your pension during divorce. If you have questions about entitlement to pension division on marriage breakdown, you should get advice from an experienced divorce lawyer. Dick Byl Law Corporation in Prince George can help you ensure that you leave the marriage on the best financial terms possible. We provide trusted legal advice and handle all aspects of family law, including proper valuation and division of pensions. We offer flexible legal consultation and customized solutions, and we will work diligently to secure a fair resolution for you.
Book an appointment at our Prince George family law office by calling us at250-564-3400or toll-free at 1-800-835-0088 today.