New divorce rules for splitting pension assets
When a couple is divorcing, things are generally split down the middle. The person with the more substantial net worth generally pays half the difference to the other person. This is known as equalization of family assets, the largest of which, other than the family home, is often a pension plan.
Pension plans are the trickiest assets to divide, however, both because they’re not valued in terms of a current balance the way RRSP accounts are, and because they generally can't be liquidated prior to retirement age.
This can lead to more conflict since most parties typically want to settle all of their marital property issues as soon as possible so they can simply get on with their lives.
But all this is finally changing.
Earlier this month, the Ontario government released draft regulations regarding the division of pension assets when marriages fail.
The new rules have disposed of “if-and-when” arrangements that, in the past, meant that non-member spouses couldn’t get their hands on the money until their husband of wife left their job or retired.
The draft regulations require the immediate settlement of a claim by a separated spouse for both active and inactive plan members.
That means it will be possible to apply for an immediate transfer of up to 50% of the pension’s value to another pension plan or RRSP. The money can also be left in the member’s pension plan.
The new rules also make plan administrators responsible for the valuation of pension assets for family law purposes as well as ensuring that any settlements are completed according to the legislation.
That means those who separate after retirement won’t get the “sorry, not really our problem” response and will instead be able to apply to the administrator for an immediate division of the pension.
You can review the draft regulations here and can comment on these regulations until April.
Have you had trouble getting a fair split during a divorce? Would this rule change have helped?
By Gordon Powers, MSN Money
Posted by: RICKSHAW | Mar 15, 2022 10:39:25 AM
STRANGE..I THOUGHT THAT THE PENSION BENEFITS DIVISION ACT WAS A FEDERAL STATUTE APPLICABLE ACROSS CANADA...MAYBE ONLY A SASKATCHEWAN STATUTE? I KNOW I HAD TO HAVE A PENSION CURRENT VALUE DONE WHEN I DIVORCED SECOND WIFE EVEN THOUGH SHE DIDN'T GO AFTER MY PENSION.
Posted by: Mona Swikert | Mar 15, 2022 11:08:43 AM
After 20 years of divorce....am I able to claim 1/2 of my ex husband's
pension? Right now, I only receive mine...I am 73 and he is 81. He never married again nor did I.
Posted by: Chip | Mar 15, 2022 11:40:37 AM
That's right Mona... keep picking at your husband's 81 year old carcass while it's still warm. Don't wait 'til he dies to wipe him clean. This is probably one of the reasons he dumped you in the first place. Obviously another money grabbing opportunity for you isn't it. Do you still have children to support ? Are you being a parasite with them also ? What about your own relatives... or have they cut you off too ? What ever happened to equality... nice pipedream. Blah blah blah... we want to be treated the same as men... except for, and then the list begins.
Posted by: Joanne | Mar 15, 2022 11:50:35 AM
Boy Chip, u really have a chip on your shoulders. Did someone take you to the clearners Chip, I detect a little bitterness from you. A--hole!!!
Posted by: Cindy | Mar 15, 2022 12:03:53 PM
Sorry!! I am a women and I agree with Chip. Support yourself.....I don't expect the man to go after mine as I won't go after his.
Posted by: Guesswho | Mar 15, 2022 12:09:42 PM
I'm female also, if you dont expect a man to go after your pension when a marriage ends you best wake up. Men or women when a relationship ends its all about money and you can bet your bottom dollar he'll look at your pension (provided yours is larger than his). And if your still harbour bad feelings after 20 yrs. GET OVER IT, good god, cant anyone take care of themselves anymore????
Posted by: Gulp | Mar 15, 2022 12:13:33 PM
OK...another reason for men not to get married.
Posted by: wingtale7 | Mar 15, 2022 12:39:28 PM
Women who stay home and raise kids not only don't get pensions they don't receive pay and they should be entitled to some or perhaps half of their spouses pensions due to that.
So Chip and Guesswho need to wake up! Not all women (or men) work outside of the home. They raise the kids, and do the housework, shop, clean, and sometimes take care of the finances. They should be entitled to something for all of that.
Not all women can go out and get a full time job with benefits while looking after the home.
My own mother worked full time after we began school but her pension is paltry compared to my Dad's.
Posted by: Canuckguy | Mar 15, 2022 12:58:08 PM
You state "..raise the kids, and do the housework, shop, clean, and sometimes take care of the finances. They should be entitled to something for all of that."
Don't forget about all the unpaid sex they provided. heh.
Posted by: BeenThere | Mar 15, 2022 1:08:32 PM
Don't take any legal advice from here as every province is different. Some provinces accept co-habitation to divide the pension and others don't. Ontario does not. Our daughter just went through this; she lived with her common-law and because they were not legally married she was not entitled to any of his pension. So make sure you check the laws in your own province. I am a female and also believe a woman should not take her husband to the cleaners; my husband and I have both been married before.....I never took my husband for anything, however his ex was vindictive (even though she had the affair) and she took him for half of everything!!!
Posted by: hockeyFan | Mar 15, 2022 1:09:32 PM
If the divorce is finalized then how can the ex come back and claim pension money? I think this article is for couples wanting a divorce in the future, no?
Posted by: Mikey | Mar 15, 2022 1:14:46 PM
I was divorced in B.C. 20 years ago and my pension (military) was divided and settled at that time.
She received a lump sum from the Federal Government at age 65 which was equal to her portion as related to our years of marriage. It ended up making my pension smaller in size when I finally got out of the military. But this was common practice then and I found it to be fair to her and to me.
Not sure if this only pertained to Military, RCMP and Civil Servant pensions but that is how the lawyers decided it then.
Posted by: Guesswho | Mar 15, 2022 1:22:44 PM
I never made any mention of those who stay at home and work so please be mature and not attack my statements. In SK (atleast) a marriage will generally end in a 50/50 split of all assets. My comments were aimed at people who think their spouse wouldnt look at splitting a pension. And, if your still looking at ways to obtain funds from a spouse of 20 yrs past, I think thats just sad. People need to search out a lawyer, one who has alot of experience in divorce, I see many look for a cheap lawyer and after the fact are not always happy. Still best to pick up your feet and make the best of life afterwards.
Posted by: annie | Mar 15, 2022 1:40:24 PM
Mikey, what a voice of reason among the crazies!!! I agree with you, my husband and I split assets about 15 years ago which meant I received half of the pension that was accumulated throughout the marriage (also military). Neither of us is bitter about any of it. He's doing really well with his new wife and I've worked ever since our divorce now that we don't move around any more. We both have good retirements to look forward to. I think many people divide assets amicably and quietly without complaint and still have respect for each others contribution to the family. So glad you spoke up Mikey.
Posted by: wingtale7 | Mar 15, 2022 1:46:11 PM
The one who can afford the best lawyer usually gets the better deal!
As for Canuckguy - Are you saying that sex is work for women and only men enjoy it? Now, that's funny!
As for Guesswho - Most senior women are living below poverty and you think they should just continue that because perhaps someone screwed up 20 years ago! Damn, you're harsh.
Perhaps the woman is just nasty but I'm not claiming to know her or her situation, or yours. You said it was all about the money, and can't anyone take care of themselves anymore!?
Not all senior women were blessed with financial knowledge they raised kids and expected their marriages to last for life. How dare they assume that their husbands should just fork over half their pension! Some of those women didn't know Jack about pension plans, chequing or taxes, or Lawyers. They were given a stripend to shop with and that was their limited knowledge of finances. At least that's how it was with both of my Grandmothers, but then their marriages did last to the end.
Posted by: Frenzie | Mar 15, 2022 2:13:24 PM
Nicely written, Chip.
Posted by: Toronto guy | Mar 15, 2022 2:50:50 PM
I have to agree with Chip and Guesswho. Why is it some women cant support themselves. What ever happened to going back to work after the kids were old enough to take care of themselves?(No . That doesnt mean 20 years old). There in school all day! Even part time would be a start. Sounds to me like some women just want to stay home because they like it and prefer it over going to work. All the divorced women I now have jobs, support themselves and are independent. The last thing they need and want is a man to look after them. They have better things to do than peck at there ex-husbands, like a vulture.
By way Joanne the only A-Hole is you.
Posted by: Angela | Mar 15, 2022 3:07:00 PM
First off let me say that I am a woman and I don't think either spouse should be able to go after pensions in certain circumstances.
My husband and I make pretty good livings, but I am the one with a pension, and a pretty good one at that. I feel like if we were to split, since he is gainfully employed and able bodied he should be able to fend for himself. I do think that assets in general should be divided, but not something I'm not going to get my hands on for another 30 years.
However, having said that... if one of us were to have given up our jobs to stay home and raise the children basically giving up our careers, then I think there may be a case for a percentage of the pension income.
I don't know.. I guess these are things that need to be discussed beforehand, and during the marriage.
Also, it never hurts for either partner to keep a nest egg separate from the joint basket - you never know when the day will come that you might need it!
Posted by: Gulp | Mar 15, 2022 3:07:43 PM
Joanne, you ask Chip if he has been taken to the cleaners. I don't know if he has but I do know several men who have--it sucks for them. I know many women smugly laugh and joke about it but for the man being "cleaned out" it sucks. I often hear women ask "why good men don't want to commit to marriage". Well the fear of being "cleaned out" is the reason. Seeing what a couple of my buddies went through cured me of any notions of romance. Why would any one with a decent income enter into such a lop-sided arrangement? Don't tell me "for love"--if the women entered it purely for love they wouldn't be seeking so much money when it ended. The only way for men to protect themselves from getting "taken to the cleaners" after their marriage is to avoid marriage altogether. Why don't more men understand this?
Posted by: Betty | Mar 15, 2022 3:23:13 PM
I am female and think that current laws on divorce are beyond ridiculous - regardless of whether women stay home with the children. There is however, greed on both sides - I would have more respect for myself than to go after assets and pensions of a former spouse.