How are pensions divided on separation in Ontario?

In Ontario, the part of a pension earned between the wedding day and the valuation date counts as property in the member's net family property. The plan administrator calculates that "family law value" when either married spouse applies. The pension does not have to be split, but if it is used to pay equalization, no more than 50 percent of the family law value can go to the other spouse.

How are pensions dealt with in Ontario, step by step?

A pension is not shared directly. It goes into the equalization calculation like any other asset, which our property division practice page introduces. Each spouse adds up what they own, and the spouse with the higher net family property pays the other half the difference. Our guide to how property is divided in Ontario walks through that process from separation to order. The pension rules decide two narrower questions: what the pension is worth for this purpose, and how money can come out of the plan if the spouses choose to use it.

For a plan governed by Ontario's Pension Benefits Act, the process usually runs like this:

Check which rules apply. The Financial Services Regulatory Authority of Ontario (FSRA) guide says the Ontario process applies when the Family Law Act governs the breakdown, the spouses last lived together in Ontario, and the plan is registered under the Ontario Pension Benefits Act. Federally regulated plans, federal government plans, the Canada Pension Plan, RRSPs and supplementary plans follow other rules.
Apply for the family law value. Either married spouse may apply to the plan administrator for a statement of the imputed value (s. 67.2(6) of the Act). FSRA calls the form the Application for Family Law Value. It goes to the administrator, not to FSRA.
Pay the fee, if any. The administrator can charge up to $200 for a defined contribution plan, $600 for a defined benefit or target benefit plan, and $800 where a plan provides both kinds of benefit (O. Reg. 287/11, s. 23).
Prove the dates. The application needs proof of each spouse's date of birth, the marriage date and the valuation date. A joint declaration signed by both spouses or a certified copy of a domestic contract is accepted for the dates (O. Reg. 287/11, s. 21(2)). If you have not agreed on the separation date, you can ask for two values based on two proposed dates (s. 22).
Receive the statement. The administrator must give the statement to both spouses within 60 days after it receives a complete application with the fee (O. Reg. 287/11, s. 25).
Put the value into net family property. The family law value is the pension figure in the net family property calculation (Family Law Act, s. 4(1), clause (c), and s. 10.1). Other assets have their own valuation methods; a company or professional practice usually needs a formal valuation, as our page on a business owned by one spouse explains.
Decide how to pay any equalization. The spouses may pay from other assets, or use the pension. If they use it, the court order, arbitration award or domestic contract must say so.
Apply to divide. The receiving spouse sends the administrator a transfer or division application. A lump sum must move within 60 days of a complete application (O. Reg. 287/11, s. 29), and the member's remaining pension is then adjusted (s. 67.3(8) of the Act).

How is the family law value worked out?

The administrator starts with a "preliminary value" of the whole pension as of the family law valuation date, which is the same as the valuation date under the Family Law Act for married spouses (s. 67.1(1)). It then keeps only the portion earned during the marriage.

Defined benefit and target benefit plans. The formula is G × H/J (O. Reg. 287/11, s. 18). G is the preliminary value. H is the credited service that falls between the marriage date and the valuation date. J is all credited service up to the valuation date.
Defined contribution plans. The value is generally the account balance on the valuation date minus the balance on the marriage date (s. 19(2)). If the member joined the plan after the wedding, the whole balance counts (s. 19(3)).

For a court order under the Family Law Act, the starting date is always the date of the marriage (s. 17(1)). In a domestic contract or arbitration, married spouses may jointly choose a starting date between the day they began living together and the wedding day (s. 17(2)). The valuation date itself often decides a lot of money in a pension case; our page on the valuation date explains how it is fixed and proved.

The family law value is a before-tax number. FSRA's checklist tells members to report the value in Part 7(c) of the financial statement and to list the future tax on it as a debt in Part 8. The Family Law Act allows applicable contingent tax liabilities to be deducted (s. 4(1.1)), and our guide to debts and tax liabilities on separation covers how they reduce net family property.

What are the options for each kind of retirement asset?

Retirement asset	How it is valued	How it can be divided	Source
Ontario pension, member not yet receiving a pension on the valuation date	Family law value from the administrator	Lump sum transfer to a locked-in retirement account, a life income fund, or another registered plan that agrees to accept it; capped at 50 percent of the family law value	Pension Benefits Act, s. 67.3; O. Reg. 287/11, s. 27
Ontario pension already in pay on or before the valuation date	Family law value from the administrator	A share of each pension payment paid to the spouse; capped at 50 percent of the family law value; no lump sum	Pension Benefits Act, s. 67.4; Family Law Act, s. 10.1(5)
Canada Pension Plan	Not part of net family property	Credits earned while living together are split by the federal government on divorce or on application	Family Law Act, s. 4(2), para. 7; Canada Pension Plan, s. 55.1
RRSP or RRIF	Account value on the valuation date, less contingent tax	Ordinary property; can be transferred to the other spouse's RRSP or RRIF under an order or written separation agreement	Family Law Act, s. 4(1.1); Income Tax Act, s. 146(16)
Federally regulated or federal government plan	Under that plan's own rules	Contact the plan administrator; the Ontario process does not apply	FSRA guide; Family Law Act, s. 10.1(2)

What changes the answer

Whether the pension was already being paid. If the first instalment was due on or before the valuation date, an order can divide the payments but cannot order any other division (Family Law Act, s. 10.1(5)). Before that point, an order can provide for an immediate lump sum transfer and nothing else (s. 10.1(3)).
The court's discretion on a lump sum. A judge deciding whether to order a transfer, and how much, may consider the assets each spouse has, how much of the member's net family property is the pension, how liquid the money would be, the tax on it, and each spouse's resources for retirement (s. 10.1(4)).
The 50 percent cap. An order or agreement that gives the spouse more than half of the family law value is not effective to that extent (Pension Benefits Act, ss. 67.3(6) and 67.4(5)). An order or agreement cannot make the administrator divide the pension in any other way (s. 67.5).
Common-law spouses. Part I of the Family Law Act does not give common-law partners an equalization claim. Only the member can ask for the family law value (Pension Benefits Act, s. 67.2(6), para. 2), and FSRA notes that common-law spouses may still divide pension assets by domestic contract or arbitration.
Older settlements. FSRA's guide says the pre-2012 rules apply where an order, award or domestic contract dated before January 1, 2012 required an equalization payment. Family Law Act s. 10.1(9) makes the same carve-out for earlier orders.
Support is separate. The transfer rules do not affect a support order enforceable in Ontario (Pension Benefits Act, s. 67.3(11)). FSRA's guide says a pension in pay can be garnished for support up to 50 percent of each instalment.
Survivor pension. Where the pension is already in pay, the spouse may waive the joint and survivor pension before the division, and that waiver cannot be cancelled (s. 67.4(8) and (9)).

A worked example

For example, imagine a hypothetical couple, Sam and Jordan. Sam belongs to a defined benefit plan registered in Ontario and is not yet retired. Sam's administrator reports a preliminary value of $300,000 on the valuation date. Sam has 20 years of credited service, 12 of them between the wedding and the valuation date. The family law value is $300,000 × 12/20, or $180,000.

Line	Sam	Jordan
Pension (family law value)	$180,000	$0
Other net family property	$220,000	$160,000
Net family property	$400,000	$160,000

The difference is $240,000, so Sam owes Jordan an equalization payment of $120,000. Sam does not have $120,000 in cash. The most that can come out of the pension is 50 percent of $180,000, which is $90,000. The couple agree in a signed separation agreement that the plan will transfer $90,000 to Jordan, and Sam will pay the remaining $30,000 from savings. Jordan sends the administrator the transfer application with a copy of the agreement, and the plan has 60 days from a complete application to move the money. The $90,000 lands in a locked-in account in Jordan's name, not in a chequing account. To keep the arithmetic simple, this example leaves out tax and interest; a real calculation deducts the contingent tax on the pension, and FSRA notes that interest may run on a lump sum from the separation date to the payment date.

Common mistakes with pensions

Using the wrong number. The figure on an annual pension statement is not the family law value. Only the statement from the administrator under s. 67.2 gives the number the law uses.
Forgetting tax. A $180,000 pension is not worth the same as $180,000 in a bank account. Leaving out the contingent tax overstates the member's net family property.
Drafting the agreement loosely. FSRA's checklist says to name the plan, use the same separation date as the valuation application, and express the transfer as a dollar amount or a percentage, but not both.
Expecting cash. A lump sum from a pension is usually locked in. FSRA says the spouse can start receiving payments at age 55, through a life income fund or a life annuity.
Mixing up the Canada Pension Plan with the equalization. CPP credits are excluded from net family property (Family Law Act, s. 4(2), para. 7) and split under federal law, so they should not be counted twice.
Changing the pension mid-case. Retiring, transferring out or changing options before the transfer is made can reduce what is available. The administrator does not have to transfer if the benefits stopped being available after the statement was issued (O. Reg. 287/11, s. 28(2)).

What to do this week

Find your plan's name and administrator on your most recent pension statement or plan booklet. FSRA's online Pension Plan Information Access tool can also look it up by employer or plan name.
Collect proof of both spouses' dates of birth and of your marriage date, such as a certified copy of the marriage certificate.
Write down the separation date you rely on. If you and your spouse disagree, consider asking the administrator for two values based on two dates.
Ask the administrator for the current Application for Family Law Value and its fee, then send it in. Keep a copy: in a court property case, rule 13(3.3), para. 2 of the Family Law Rules requires you to serve your valuation request on the other side.
Gather statements closest to the valuation date for every RRSP, RRIF, locked-in account and workplace savings plan (rule 13(3.3), para. 1).
Do not retire early, change your survivor pension choices or move money out of the plan until you have advice. Book a free consultation if you want us to review the numbers with you.

Frequently asked questions

Can my spouse get my pension value without my consent?

Yes, if you are married. Under s. 67.2(6) of the Pension Benefits Act, either spouse may apply for the statement, and the administrator must send it to both of you. A common-law partner cannot apply; only the member can.

Do we have to split the pension at all?

No. The pension's value must be counted, but the equalization payment can be made from any assets. FSRA's guide says spouses may, but do not have to, use pension assets to pay it. Many couples trade the pension against the house or other savings, after adjusting for tax.

What happens to Canada Pension Plan credits?

They are split under the federal Canada Pension Plan. After a divorce, the division takes place once the federal Minister is told of the judgment and gets the prescribed information. Separated married spouses can apply after living apart for a year, and common-law partners generally must apply within four years of separating (s. 55.1(1)). Only months the two of you lived together count (s. 55.1(4)), and a private agreement not to split binds the Minister only in narrow cases set out in s. 55.2(3).

Is a pension transfer taxed like support?

No. A pension transfer is a division of property, not support. The lump sum is stated before tax and normally moves into a locked-in plan, while support has its own tax rules, which our guide to how support is taxed in Canada explains. Speak with a tax professional about your own return.

What if one of us dies before the pension is divided?

If the receiving spouse dies before a lump sum is transferred, it is paid to that spouse's estate (Pension Benefits Act, s. 67.3(5)). If the member dies first, different rules apply, including a valuation date of the day before death and an election by the survivor. Our page on death and equalization covers those steps.

Does my pension count again for spousal support?

Once a pension is in pay, the payments are income. Support uses its own income test, separate from the property calculation, and our page on what counts as income for support explains it. If both property and support are in play, raise the overlap early so the numbers are looked at together.