Is a pension divided when married spouses separate in Ontario?

Yes. In Ontario, pension benefits earned during the marriage are included in the net family property calculation and are subject to equalization. This applies to both private-sector pensions and government pensions (with some variations for federal public service pensions under separate federal rules).

The portion of the pension that counts is the value of the pension as of the date of separation minus the value as of the date of marriage (using actuarial calculations). The pension is typically valued by the plan administrator and can be a significant asset.

There are two main ways to deal with a pension in separation. First, the pension-owning spouse can compensate the other with different assets of equivalent value — for example, cash, RRSP transfers, or a larger share of home equity. Second, under Ontario legislation, a spouse may be entitled to have a share of the pension transferred directly into a locked-in retirement vehicle. This is called a "Family Law Value" transfer and requires the pension plan to implement a division of the pension entitlement.

Because pension valuation is complex and can involve actuaries, this is an area where professional advice is especially important.