What Happens to Our Pension and RRSPs When We Separate in Ontario?

A pension and your RRSPs are both part of the picture when you separate, but they are handled in different ways. An Ontario pension is property counted in net family property, and to see its value for family law purposes you ask the pension plan administrator. Married spouses share equally the value of property acquired during the marriage, with the spouse who has the larger net family property paying half the difference.

For RRSPs, a tax-free direct transfer from one spouse's or common-law partner's unmatured RRSP to the other is allowed if they are living separate and apart at the time and it is made under a court decree, order or judgment, or a written separation agreement, to settle rights arising from the breakdown. Form T2220 is normally used. If funds are paid out to you rather than transferred directly, they are taxable.

Rules for dividing a pension can differ depending on the type of plan, so confirm the details before you sign. Because money paid out of an RRSP rather than transferred directly is taxable, get advice from a lawyer or accountant before agreeing to any split of retirement savings, and ideally before a settlement is final.