Expertise / Family Division of Pension Plans

Are you going through a divorce and have many questions about the division of pension plans? We’re here to help.

While many questions can be answered with the help of the guides, sample letters and forms in our legal toolkit, an independent jurist affiliated with PSP Legal will always be happy to help you by answering any questions you may have.

Of course, if you prefer to have an experienced practitioner take charge of your situation and intervene directly and quickly on your behalf, you can also request that one of the independent jurists affiliated with PSP Legal represent you by clicking here.

 

What is pension splitting?

Pension plan entitlements are part of the family patrimony. Their division is therefore provided for within the framework of the division of family patrimony. Consequently, as with other family patrimony assets, the division of pension plans applies only to spouses and civil union partners. 

However, spouses and civil union partners may waive the division of pension plans. As for de facto spouses, the law does not provide for the division of pension plan entitlements. However, they may sign a prior agreement concerning the division of each spouse’s pension plan in the event of separation. In the absence of a cohabitation agreement, common-law partners are not obliged to divide their pension plans.

The pension plan amounts included in the division calculation are those accumulated during the marriage. Thus, amounts accrued prior to the date of marriage will not be included in the calculation. It is therefore the date of marriage or civil union that will be taken as the starting point for calculating the amount eligible for division of the pension plans. Two dates may be used to establish the value of the pension plans to be divided: the date on which the couple ceased living together, or the date on which proceedings were instituted.

The rules governing the division of pension plans differ according to the type of pension plan.

 

Division of earnings registered with the Régie des rentes du Québec ( RRQ ) or equivalent programs

The division of earnings registered with the Régie des rentes du Québec ( RRQ ) or an equivalent program takes place automatically once a judgment has been obtained. A notice of divorce, legal separation, nullity of marriage or civil union or dissolution of civil union will be sent to the Régie des rentes du Québec (RRQ). Half the earnings accumulated by the spouse will then be transferred to the other spouse. It is therefore not necessary to apply to the Régie for a transfer. However, it is often advisable to request a simulation of the effects of the division, in order to understand the impact of such a division. This information will also enable you to make an informed choice should you wish to forgo the sharing of QPP earnings.

 

Division of registered retirement savings plan earnings

Amounts accumulated in an RRSP-type account will also have to be shared. These are amounts accumulated during the marriage. To determine the value of the amount to be shared, you’ll need to ask your financial institution for statements of account. It should be noted that RRSPs are taxable. So, while some people may believe that exchanging a $450,000 RRSP for a $450,000 house is fair, this is far from the case. In fact, the proceeds from the sale of the family home are tax-free.

 

Sharing government pension plans

Amounts accumulated under a federal private/public pension plan or under a provincial private/public pension plan will also be shared between the spouses. This includes amounts accumulated during the marriage. However, the spouses will have to forward the judgment obtained to the administrators of their plans before the transfer can take place.

As with RRSPs, pension funds are taxable.

Finally, contrary to popular belief, the sums transferred cannot be cashed in and used for new projects. Instead, they must be transferred to a locked-in retirement account (LIRA), a life income fund (LIF) or an annuity contract. In addition, as previously mentioned, it is possible to waive the division of pension plan entitlements accumulated during the marriage at the time of divorce.

 

How we can help

Our legal toolkit includes a variety of online resources and links to templates and guides to help you better understand your obligations.

However, should the Legal Toolkit prove insufficient in your situation, you can obtain additional assistance by speaking with one of PSP Legal’s affiliated jurists:

Of course, if you prefer to have an experienced practitioner handle your situation, you can always request that one of the independent jurists affiliated with PSP Legal intervene on your behalf by clicking here. He or she will then be able to intervene directly and rapidly on your behalf by:

  • Preparing, negotiating and drafting applications, procedures or any other legal documents related to your situation;
  • Assisting and advising you on your legal rights and obligations;
  • Representing you before the courts when legal action is taken;
  • Guiding you through the choices available to you, leading to a fair and satisfactory solution.

 

PSP Legal, because you deserve expert advice!

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