Separation or divorce
For most of us, the main motivation to go to work every day is to provide a good quality of life for ourselves and our loved ones. Whether you’re embarking on a new journey with a spouse or partner or ending a relationship, it’s important to understand how your pension is affected. After all, your pension is an important asset and is part of your personal financial plan.
Who is defined as an eligible spouse under the PSPP?
An eligible spouse is someone you’re legally married to or someone you’ve been living with in a spousal relationship for at least three years, or as the parents of a child.
If I’m going through a breakup, is my spouse entitled to part of my pension?
Yes, your spouse may be entitled to up to 50% of the value of the pension you earned during your relationship if you were legally married. However, this is subject to both a valuation process (read more about Family Law Value (FLV) below) and a formal negotiated settlement.
Is there anything I need to do when my relationship ends?
Yes, the most important thing you need to do is update your spousal status with us through your e-services account. When you eventually pass away, we want to make sure the right individual receives survivor benefits, so please update your information as soon as possible after any changes.
What are some key considerations to be aware of when my relationship ends?
Different rules apply before and after January 1, 2012 – If you were an active or deferred member when you separated and your separation agreement is dated:
- On or after January 1, 2012, and you have agreed to a pension division, your former spouse will receive a lump sum benefit after we receive the required documentation.
- Prior to January 1, 2012, and you have agreed to a pension division, depending on the terms of your agreement and if you assigned the pre-retirement death benefit to your former spouse, they will receive a benefit when you leave the PSPP, pass away or retire in the same format as you will (i.e., lump sum, monthly pension, etc.).
Speak with a lawyer – Any agreement you and your former spouse reach must follow the law and be compatible with the provisions of the PSPP. We suggest you provide us with a copy of any agreement or court order as soon as possible to determine if it can be administered.
Family Law Value (FLV) – The Family Law Value is the value of your PSPP pension that you earned during the time you were with your spouse. Once you’ve submitted the completed version of your FLV application, we’ll provide you with an FLV. Depending on how your assets are divided, there may be entitlements that are paid to your former spouse.
Because this process requires some time to complete, it’s best to apply for the FLV early. With legally married spouses, either the member or the former spouse can request the FLV. Whereas with common-law spouses, only the PSPP member can request it. The application and division processes and the Financial Services Commission of Ontario (FSCO) forms you’ll need to complete are available on the Forms page. Once your settlement has been finalized, please let us know if you decided to maintain or divide your pension, and provide a copy of your separation agreement, court order, etc.
Takeaways and advice
To understand the potential impact of a spousal status change to your family assets, we recommend you speak with a lawyer. If you have any questions about dividing your pension and how it can affect your PSPP entitlement, contact us at 416-364-5035 or toll-free at 1-800-668-6203.
To learn more about the impact that a spousal relationship change can have on your pension, read:
- Dividing Pensions, Old Rules (PDF) – for agreements signed before January 1, 2012
- Dividing Pensions, New Rules (PDF) – for agreements signed on or after January 1, 2012
- Planning Today for Tomorrow (PDF)
You can also find more information on FSCO’s website at fsco.gov.on.ca.
If you haven't already registered for e-services, click Login at the top-right corner of the page and follow the steps to create your account. Once you’re logged in, make sure you keep your contact information, spousal status and beneficiary information up to date.