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 a spouse under the PSPP?
Under the PSPP, your 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. This is the key definition for family law purposes.
To be eligible for a survivor pension or other survivor benefits, a spouse must qualify as the “eligible spouse”, which has some additional eligibility criteria. The effect of a relationship breakdown on survivor benefit eligibility is discussed below under “What’s the impact of a spousal relationship breakdown on PSPP survivor benefits?”
If I’m going through a spousal relationship breakdown, is my spouse entitled to any of my pension?
Your spouse may be entitled to up to 50% of the value of the pension you earned during your relationship. However, that doesn’t necessarily mean that your former spouse will get half of your pension. Under the Ontario Family Law Act, you and your former spouse may arrive at a negotiated settlement (such as a separation agreement) that divides your total assets, rather than individual assets (such as your pension). Such an agreement could allow you to retain the full amount of your PSPP pension benefits in exchange for other assets of equal value. A court order may achieve the same result.
If you and your former spouse divide your pension, you will need to follow the valuation process discussed below under “What are some key considerations to be aware of when my relationship ends?”
What’s the impact of a spousal relationship breakdown on PSPP survivor benefits?
To qualify as your “eligible spouse” and be automatically entitled to survivor benefits, you and your spouse must not be living separate and apart on the following dates:
- for pre-retirement death, the day you pass away
- for post-retirement death, the first day of the month when your pension starts
This means the effect of a spousal relationship breakdown on PSPP survivor benefits depends on whether the breakdown occurs before or after retirement.
Breakdown before retirement
If your spousal relationship breaks down before retirement, your former spouse is not entitled to any survivor benefit when you pass away.
Breakdown after retirement
If you and your spouse are not living separate and apart on the first day of the month your pension starts, your spouse will be entitled to a survivor pension, even after you separate. Where your separation agreement is dated on or after January 1, 2012, your former spouse may waive the survivor pension.
For more information on survivor benefits, please see Survivor benefits to protect your loved ones.
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. We want to make sure the right person receives survivor benefits when you pass away, so please update your information as soon as possible.
Depending on the arrangements between you and your former spouse, you may need to take additional steps, including applying for a Family Law Value (FLV) or providing a copy of your separation agreement to OPB. Please see below under “What are some key considerations to be aware of when my relationship ends?”
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, 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) (for separation agreements dated on or after January 1, 2012) – 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 (please note that although FSCO’s duties have been assumed by the Financial Services Regulatory Authority of Ontario (FSRA), FSRA has yet to update the FSCO forms). 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 the Financial Services Regulatory Authority (FSRA) website at fsrao.ca(opens in a new tab).
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.