Separation or divorce

What happens to the pension you earned during your marriage or common-law relationship.

 

LIFE EVENTS

What you need to know

Your pension may represent a significant part of the family property you've built during your relationship with your former spouse or common-law partner. This page outlines the process of dividing the value of your pension assets in the event of a separation or divorce under the Ontario Family Law Act. If your jurisdiction of employment is not Ontario, contact the CAAT Pension Plan directly for more information.

Dividing your pension if you were legally married

If your jurisdiction of employment is Ontario and you and your spouse/former spouse are separating or divorcing, you are required to include the pension you earned during your time together (the Family Law Value) when calculating your net family property. This doesn’t mean you have to divide your pension; it means you must consider its value in the division of all family property. This requirement doesn’t apply to common-law relationships, but is optional if the member initiates the process.

What is the Family Law Value?

The Family Law Value is the value of the pension you built during your relationship with your former spouse. The calculations for determining it are set by the Financial Services Regulatory Authority of Ontario (FSRA). For defined benefit plans such as the CAAT Pension Plan these calculations can be complex.

Are you retired?

If you were married before you retired, and separated after retirement, the spouse you had at retirement retains the right to a survivor pension unless the prescribed waiver is completed as part of the settlement process.

Overview of the process

In Ontario, the rules for dividing a member’s pension after a separation or divorce state that:

  • The Plan calculates the value - The Plan calculates the Family Law Value of the pension the member earned during the relationship, and provides it to both the member and their spouse/former spouse.
  • There is immediate settlement of benefits - If the member and their former spouse agree or are required to divide the value of the member’s pension, the spouse’s portion of the Family Law Value will be immediately split from the member’s entitlement. It may be transferred to a locked-in account until the spouse reaches retirement age.
  • Specific forms must be used - The FSRA has issued the forms that must be used to apply for the valuation and instruct the Plan on the decision about the division of the Family Law Value of the pension.

Four steps to follow

These following steps outline the process and forms required to determine what happens to your pension if your marriage ends in separation or divorce. For details, visit the FSRA website.

1. Use the FSRA Application for Family Law Value Family Law Form FL–1 (Form FL-1) to ask the Plan to calculate the Family Law Value of the pension you earned during your time together.

  • If you were legally married: Either you or your former spouse can file the application.
  • If you were in a common-law relationship: Only you (not your former partner) can file the application.

Take note:
If acceptable documents (such as a marriage certificate or separation agreement) are not available, both you and your former spouse must confirm the start and end date of your spousal relationship by completing Appendix A of the form. However, if you and your former spouse disagree on the date your relationship ended, and want two Statements of Family Law Value, both parties must complete and sign Appendix B.

2. Send the application to the CAAT Pension Plan along with the documents listed in Part G of the form.

To avoid delays, make sure your application form is complete and all required documents are included.

Your application form cannot be processed without the following information:

  • Part B – Pension Plan information
  • Part D – Spouse/former spouse of the Plan member information
  • Part D – Contact person for the spouse/former spouse (optional)
  • Part E – Starting date of spousal relationship
  • Part F – Family Law Valuation Date (e.g., Separation date)
  • Part G – Documents and fee (Note: CAAT does not charge a fee)
  • Part H – Plan member/former spouse signature and date
  • Appendix A OR Appendix B if required

Your application form cannot be processed without the following required documents:

  • Proof of Plan member’s date of birth
  • Proof of spouse/former spouse’s date of birth
  • Proof of marriage or start of common-law relationship (or completed Appendix A)
  • Proof of separation date (or completed Appendix A or B)

Within 60 days of receiving your completed application, CAAT will send both parties (married or common-law) copies of the Statement of Family Law Value of your CAAT pension. If your application is incomplete, CAAT will request the missing information from you and/or your former spouse before issuing the Statement of Family Law Value.

If you and/or your former spouse provide a different mailing address on the form (such as a legal office), the Statement will be sent to that address only; you will not receive a separate copy unless you request it.

You and your former spouse determine how the Family Law Value of your pension is to be treated within the context of all your family property. If you agree to divide your pension, the maximum amount that your former spouse can receive is 50 per cent of the Family Law Value of your pension.

You must then get a court order, enter into a domestic contract, or seek a family arbitration award that spells out the agreement you have reached.

If you decide to divide your pension, your former spouse informs the Plan by submitting a copy of your court order, domestic contract, or family arbitration award, along with one of the following forms:

  • If you have not started to collect your pension: Use the Spouse’s Application for Transfer of a Lump Sum Family Law Form (FL–5).
  • If you have started to collect your pension: Use the Spouse’s Application to Divide a Retired Member’s Pension Family Law Form (FL–6) and/or
    • You can also submit a completed Post-retirement Waiver of Survivor Pension After Separation (Optional) (FL–8) as applicable.

These forms are included with your former spouse’s copy of the Statement of Family Law Value at Step 2. On the form, your former spouse will choose their payment option for their portion of the Family Law Value of your pension:

  • If you had not started to collect your pension as of your separation date: Your former spouse will receive their share of the Family Law Value of your pension as a locked-in lump sum that can be transferred to a registered retirement vehicle. Your pension will be permanently reduced to reflect the Family Law Value transferred to your former spouse.
  • If you had already started to collect your pension as of your separation date:              
    • Your pension will be divided into two payments; one paid directly to your former spouse and the other to you. The Plan will let you know the amount of your pension reduction and the amount to be paid to your former spouse. You and your former spouse will each receive a separate T4A tax form, and will be subject to separate income tax withholding that reflects each of your financial circumstances.
    • If you use the optional FL-8 spousal waiver, your spouse at retirement will no longer have the right to receive a survivor pension upon your death.

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