Ending a relationship – and what it means for your pension
If you and your spouse separate or divorce, you’ll need to decide how to divide your shared family assets, including your pension.
Under BC law, a pension is shared family property, just like a house, car or bank account. This means that if your spousal relationship ends, your former spouse may be entitled to an equal share of the pension you earned while you were in the relationship.
Dividing financial assets is complicated, and there are many complex decisions to make. For this reason it’s often wise to have an independent professional, such as a lawyer, help you and your former spouse decide what options are best for you and how best to divide your family’s financial assets.
In this article, we’ve assumed that you and your former spouse have agreed to divide your pension benefit. Here’s what that might mean for both of you.
If you separate before you start receiving your pension
Your former spouse can receive their share of your pension as soon as you reach your earliest retirement age or when you leave the plan.
Your former spouse may also be able to choose how they want to receive their share of the pension – as a lump-sum transfer payment to a registered retirement plan (like an RRSP) or as a lifetime monthly pension.
When you apply for your pension, we’ll adjust your payment to reflect the portion that we pay directly to your former spouse. This means your pension payment will be less than it would be if you were still in the spousal relationship.
If you die before you start receiving your pension, your former spouse will receive their proportionate share as per your completed, signed separation agreement or registered court order.
If your former spouse dies before they start receiving their share of your pension, we will pay their share to their estate or beneficiary. This only applies if they are a limited member of the plan and have not yet started receiving their share of your pension, or if their estate or beneficiary becomes a limited member.
If you separate after you start collecting your pension
If you separate after you start collecting your pension, your former spouse cannot choose a different pension option. Whatever pension option you chose will also apply to them. For example, if you chose a joint life pension with a 10-year guarantee, your former spouse will receive their share of this same pension option. You cannot change the pension option you chose at retirement.
Your former spouse may want to directly receive their share of the pension into their bank account each month. They can do this by applying to become a limited member of the plan.
When you die, your former spouse may continue to be paid their share of the pension (it depends on the pension option you chose).
When your former spouse dies, you will receive their remaining share. If you are considering a new spousal relationship, the pension option you chose applies to only you and your former spouse. Your new spouse is not eligible for a benefit unless your former spouse waived their rights when you started to receive your pension.
What you need to do
As you can see from the summary above, dividing a pension is complicated: there are many issues to consider and decisions to make. You can explore the resources on this site to learn more about what’s involved, but some actions you may need to take include:
- Giving us permission to share information about your pension with a third party, such as a lawyer
- Letting us know how to divide the pension by sending us a complete, signed separation agreement, registered court order or Form P9 Agreement to have benefits divided under part 6
- Having your former spouse apply to become a limited member of the plan
- Having both you and your former spouse update your beneficiary information
- Updating your names and contact information, if they have changed as a result of the separation
The Family Law Act clarifies division of assets when relationships break down. Under the act, common-law spouses are treated the same as married spouses for the purposes of dividing a pension. This means common-law spouses have the same rights and responsibilities as married spouses with respect to pension benefit entitlements.
"... if your spousal relationship ends, your former spouse may be entitled to an equal share of the pension you earned while you were in the relationship."