Dividing Pensions in a Separation Agreement in Ontario

For many people, a pension is one of the largest assets in a relationship, yet it is the hardest to see and value. You may have a workplace pension, Canada Pension Plan (CPP) credits, or both.

This article explains how pension value is generally shared in an Ontario separation agreement and what extra steps make the division actually work. Your facts, including whether you were married, matter a great deal.

Married and common-law couples are treated differently

For married spouses, each spouse adds up the value of property owned on the separation date, minus debts and excluded property, and then subtracts the value of property, minus debts, owned on the date of marriage. The spouse with the larger net family property pays the other an equalization payment.

Ontario's equalization regime does not apply to unmarried couples, and common-law couples are not legally required to split property acquired while living together. How a pension is treated for a common-law couple depends on the facts, so it is worth getting advice.

How a workplace pension is valued

The Family Law Act values a spouse's interest in a pension plan using the imputed value set under the Pension Benefits Act. Ontario guidance says to ask the pension administrator for information about the value of a pension.

A domestic contract, family arbitration award or court order cannot entitle the eligible spouse to more than 50% of the imputed value of the member's pension. For property other than a pension, spouses can divide it any way they agree in a separation agreement, but each spouse should have their own lawyer review it, and the agreement cannot easily be changed later.

Extra steps to move a share of the pension

Writing a pension split into your agreement is only part of the job. To transfer a share of an Ontario pension, the application must include a certified copy of the domestic contract, arbitration award or court order. That document must state the family law valuation date, the applicant's entitlement and the amount to be transferred.

FSRA forms include FL-1 (Application for Family Law Value) and FL-5 (Spouse's Application for Transfer of a Lump Sum). An agreement that leaves out the valuation date or the amount can cause problems later.

If the pension member is already retired, an immediate lump-sum transfer is available only if the spouses are separated with no reasonable prospect of resuming cohabitation and no pension instalment was due on or before the family law valuation date.

• Name the pension plan and the member
• State the family law valuation date
• State the entitlement and the amount to be transferred
• Remember the 50% limit on the imputed value
• Make sure the agreement is signed and witnessed

Splitting CPP credits

CPP contributions made while spouses lived together can be split after a divorce, annulment, or separation from a marriage or common-law relationship. Divorced spouses need at least 12 consecutive months living together. Separated married spouses need 12 months together and 12 months apart. Either person can apply, online or on form ISP1901, and the split is permanent.

Only some spousal agreements can prevent a CPP credit split: those made before June 4, 1986, or certain agreements in Quebec, Saskatchewan, British Columbia and Alberta. Ontario is not among the listed provinces.

Common-law partners generally must apply within 48 months of starting to live apart. Divorced spouses and separated married spouses have no deadline, unless the spouse dies.

There is a further point for separated legal spouses. If a CPP credit split was approved on or after January 2025, the person generally loses eligibility for the CPP survivor's pension for that ex-spouse. Reconciling and living together for 12 months or more before death can restore eligibility.

What to do next

• Ask each pension administrator for information about the value of your pension.
• Confirm whether you were married or common-law, since the rules differ.
• List every pension and CPP entitlement for both of you.
• Have your agreement drafted to include the details needed for a transfer.
• Diarize any CPP deadline if you are a common-law partner.
• Get your own lawyer to review the agreement before you sign.

Frequently asked questions