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Splitting Canada Pension Plan Credits: What You Should Know

When a marriage ends, part of the process requires that couples divide their property. In Ontario, the contributions of both spouses throughout the duration of the relationship are recognized and typically shared equally. In some instances, there may be exceptions such as excluded property or one spouse could owe the other equalization payments.


Canada's Pension Plan and Property Division

Contributions to Canada’s Pension Plan made throughout a marriage are considered divisible property and in Ontario, splitting CPP credits upon divorce is mandatory. While this may seem straightforward, failure to properly understand the implications of CPP credit splitting has the potential to result in financial frustration if you aren’t properly informed.

When Its Gone, Its Gone

A recent case in British Columbia saw a man surprised to find his CPP payments significantly lower than he expected them to be after his former wife passed away. Despite the fact that B.C. law does not require CPP credit splitting, the man agreed to it at the time of his divorce. Because a pension is payable for life, the payments end when the life does and unlike a married couple, divorced spouses are not entitled to receive survivor pensions following their former partner’s death. Regardless of having contributed more to the plan than his then-wife for decades, the B.C. man was ultimately left with a markedly lower pension than he’d planned for.

Get Help Today To Prepare for Tomorrow

Given the fact that credit splitting is compulsory in Ontario, it is critical to understand what this means for your future. When it comes to dividing property, having the right type of legal support is imperative. Unlike some other aspects of the property division process, a couple cannot opt out of CPP credit splitting in a marriage agreement, separation agreement, or through any other means. By getting legal guidance as you navigate the property division process, you can more forward with confidence instead of confusion.

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