What happens to CPP and pensions in a divorce?
By Krystian Urbanski, CIM, CIWM, FCSI, PFP · Chief Retirement Strategist, RetirementIQUpdated · 3 min read
After a divorce or separation, CPP credits earned while you lived together can be divided equally between you, on application to Service Canada. In Ontario you cannot contract out of it; in British Columbia, Alberta, Saskatchewan and Quebec a spousal agreement can prevent the split. Workplace pensions and RRSPs are divided under provincial family law, usually tax-free.
CPP credit splitting
CPP credits (pensionable earnings) that both of you built during the years you lived together can be added up and divided equally. The lower earner usually ends up with a larger CPP. Either former spouse can apply, and once split, it is permanent.
- You must have lived together for at least 12 consecutive months.
- Separated married couples and common-law partners must have lived apart for at least 12 consecutive months.
- Common-law partners generally must apply within 48 months of separating.
- Divorced spouses have no deadline.
- Spousal agreements made under provincial law in British Columbia, Alberta, Saskatchewan and Quebec can prevent the split; in Ontario they cannot.
Workplace pensions
Registered pension plans are divided under provincial family law and pension legislation. In Ontario, for example, the plan administrator calculates a “family law value” and up to 50% of it can be transferred to the former spouse, usually to a locked-in account. Rules differ in BC and Alberta.
RRSPs, RRIFs and TFSAs
RRSP and RRIF money can be transferred directly to a former spouse’s plan without tax when it is done under a written separation agreement or court order (CRA Form T2220). Cashing out to pay a former spouse is taxable. TFSAs can also be transferred directly without using the recipient’s room.
After the paperwork
Update the beneficiary on every registered account, pension and insurance policy, and make a new will. A former spouse named years ago may still receive everything.
Lisa and Mark were married for 22 years; Mark earned the maximum, while Lisa worked part time for 10 of those years. After their divorce, splitting their CPP credits for those 22 years raised Lisa’s projected CPP at 65 by a few hundred dollars a month for life, and lowered Mark’s by a similar amount.
What to do next
- Apply to Service Canada for the CPP credit split.
- Ask your pension administrator for the family law value.
- Use Form T2220 for RRSP or RRIF transfers under the agreement.
- Update beneficiaries, your will and powers of attorney.
Free tools that help
Related questions
Is CPP credit splitting automatic after divorce?
No. Service Canada splits credits when it is told about the divorce and one of you applies. Applying for a CPP benefit can also prompt the split. Once done, it cannot be undone.
Can my ex get my CPP survivor’s pension?
Only a person who was your spouse or common-law partner at the time of your death can receive the survivor’s pension. A separated (not divorced) spouse may qualify if there is no common-law partner.
Do we split OAS in a divorce?
No. OAS is based on years of residence in Canada, not contributions, so there is nothing to split.
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