Divorce Affects Pension Plans

Hard earned pension plans may be subject to division during a divorce.

Dividing Assets is Tedious

Building a life with another person is both rewarding and beneficial. However, when a relationship turns sour, it can also spoil years of combined progress and efforts towards a common goal. Couples frequently fight and argue over assets and property because of the perceived imbalance that leads to the marriage breakdown.

A divorce can affect everything from the marital home and shared property, to gifts and credit ratings. It can also affect valuable investments — like pensions — that each party may mistakenly believe are solely owned.

Knowing what is going to be affected and how to protect important assets is a key concern in divorce proceedings. The assistance of a knowledgeable and experienced family law attorney who can guide you through a divorce and advise you about the law and your best course of action is a necessary ally in court.

Pensions Subject to Legal Division

While a divorce gives rise to pension-related questions, it takes less than a final decree, or even an application for divorce, to trigger a claim against a former partner’s pension. Pursuant to federal statutes, after a year of separation — regardless of divorce proceedings — a pension becomes eligible for division.

The Pension Benefits Division Act, S.C. 1992, c. 46, Sch. II, provides for the division of a pension by application only for:

• former spouses who are divorced in accordance with The Divorce Act
• partners who are separated and living apart for a period of a year
• common-law partners whose relationship lasted at least a year

The rules and regulations for pension division are complex and vary according to agreements, relationships, and the type of individual pension in question.

Attempting to negotiate the different statutory applications can be a daunting task for someone unfamiliar with the procedure. Whether protecting your own pension, or pursuing your entitlement to another, even the slightest error in application or calculation can prove fatal to the claim. Additionally, pension divisions must receive approval of a court before they can be processed by the appropriate agency.

Public vs. Private Pensions

The Pension Benefit Division Act enumerates ten types of pensions that fall within the jurisdiction of the act. Many of the pension plans subject to division include public plans like those accumulated for:

• public service in the employ of a government agency
• military service
• duty with the RCMP

In addition to these and other plans, the Act also provides for a category of plans established pursuant to the Special Retirement Arrangements Act. Determining whether your pension falls within the purview of one of the many considerations of the act as either a public or a private plan can be a legal challenge.

Whether you worked hard for your pension, or you supported someone who earned equity in a plan during the marriage, a pension can be a marital asset worth protecting. As with any equitable division of property following the breakup of a marriage, a pension’s value, ownership, and division may all be disputed in mediation or court.

A Pension is Worth Protecting

Before signing any papers or agreeing to any conditions or settlements of a divorce, be sure to speak to a qualified family law attorney who knows the latest legal revisions and statutes. Leaving a marriage does not have to mean that the investment of time and money is a total loss. Protecting your property and assets is about more than finances — it is about securing a future where you can rebuild and move on after the marriage ends. Contact Fine & Associates for a consultation today.