How a separation or divorce affects
your pension
Teachers’ Pension Plan
If you are going
through a
separation or
divorce your
pension will be
affected
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f you are going through a separation or divorce, you have many things
to think about, including how your pension will be affected. Your
pension is considered to be a family asset, like a house or a car, so your
former spouse may be entitled to a portion of it. This PensionFacts
highlights some of the main considerations you should be aware of.
We strongly recommend you and your former spouse obtain
independent legal advice about your individual rights when dividing
a pension or any other family assets. The Teachers’ Pension Plan cannot
provide advice on this topic.
What happens to my pension if my spouse and I separate or divorce?
Your spouse is someone you are married to and have not been separated from for more
than two years, or someone you have been living with in a marriage-like relationship for
at least two years.
Your former spouse may be entitled to a share of your pension based
on the portion of the pension you earned while you lived together.
People who live together in a marriage-like relationship for a
continuous period of two years or more are considered to be spouses.
Under the Family Law Act, which came into effect on March 18, 2013,
common-law spouses are treated the same as married spouses for the
purposes of dividing a pension. This means common-law spouses who
make application after this date have the same rights and responsibilities
as married spouses with respect to pension benefit entitlements.
If you divorce or separate, you and your former spouse can agree
to divide the pension, with each of you receiving a share, or you may
agree to leave the pension intact and divide family assets another way.
Whatever route you choose, a separation agreement or court order
will define how we administer your pension, so you should provide us
with a copy of that agreement or order as soon as possible.
What information is available to my former spouse about my pension?
A “limited member” is a former spouse of a plan member who is entitled to a portion of
the plan member’s pension benefits once they or the plan member have submitted the
proper forms and paid an administrative fee.
Before you retire
Your former spouse will be entitled to receive a copy of your Member’s
Benefit Statement (MBS) and other documents to allow an actuary to
value the pension entitlement if they file a Form P1: Claim and Request for
Information and Notice. If they submit a Form P2: Request for Designation
as Limited Member and become what is known as a limited member of
the pension plan, they will automatically receive a copy of your MBS each
year. Certain information will be excluded to protect your privacy, but
the statement will show your pension benefit, including your pensionable
salary, and the amounts shown will include any portion your former
spouse may be entitled to receive.
After you retire
Your former spouse will able to receive a copy of your pension statement
by filing Form P1: Claim and Request for Information and Notice to claim
an interest in a share of your pension. If they submit a Form P2: Request
for Designation as Limited Member and become a limited member, the
pension will be divided and your former spouse will receive a statement
showing information about their share only.
How can my former spouse get his/her share?
To receive their share directly from the plan, your former spouse must
become a limited member. You or your former spouse can do this by
submitting the required Form P2: Request for Designation
as Limited Member, paying an administrative fee to the
Submit proof-of-age documents early
plan, and providing documentation such as a separation
agreement or court order.
to prevent delays at retirement
Once your former spouse becomes a limited member
they can receive their share of your pension when
you become eligible to retire, provided you are either still working and
contributing to the plan or you have left your contributions on deposit
with the plan.
If you stop working for a plan employer before your
earliest retirement age and transfer your pension as a
Fee requirement: the fee to become
lump sum to a locked-in retirement vehicle such as a
locked-in retirement account (LIRA), registered pension
a limited member of the plan is $750
plan (RPP), life income fund (LIF) or deferred annuity
provided by a life insurance company, the limited
member must do the same with their share of the pension.
Becoming a limited member will also allow your former spouse
to name a beneficiary to receive any pension amounts still due to them
in the event of their death.
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If your former spouse does not become a limited member, you will
receive the full amount of your pension—and be taxed on the entire
amount—and will have to pay your former spouse’s share to them
directly. We recommend you seek financial or legal advice if you are
in this situation or have questions about what it could mean for you.
How will my former spouse’s share of the pension be paid out?
Depending on the situation, once they become a limited member,
your former spouse may be entitled to either a monthly pension or a
lump-sum payment to a locked-in retirement vehicle. There are factors
that affect your former spouse’s options, including your age, whether
you’re eligible to retire and how you choose to receive your pension
benefit (i.e., as a pension or lump sum, if you’re eligible to receive one),
when you stop working for a plan employer.
What if we agree not to divide my pension?
You and your former spouse might agree you can keep your entire
pension in exchange for splitting another family asset. In this case,
you might need to know the value of your pension so you can negotiate
a settlement with your former spouse. If you have not yet retired,
an independent actuary can calculate the value of your pension using
information we can provide. You can find information about retaining
an actuary on the website of the Canadian Institute of Actuaries,
www.actuaries.ca.
I’m about to retire. What happens now?
If you are retiring and your former spouse is a limited member who
has not yet started receiving their share of the pension, we will notify
them of their pension options, just as you are notified of your options.
We will calculate your pension and your former spouse’s entitlement
and pay their share directly to them.
If your former spouse is not a limited member but has submitted
a Form P1: Claim and Request for Information and Notice to claim an
interest in your pension, we will contact them and give them 30 days
to become a limited member. If they are still not a limited member after
that, we will pay your full pension to you, and you will be responsible for
paying your former spouse their share.
I’m already retired and getting my pension, and my spouse and I are
now divorcing or separating. How does this affect us?
Your monthly pension payment is considered a family asset, and your
former spouse may be entitled to a share of it. Your former spouse can
become a limited member and receive a share of your pension directly
from the plan, as a pension of their own. This would mean your pension
payment would be reduced by the share that goes to your former spouse.
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When pensions are divided after retirement, the pension option chosen
by the member at retirement still applies to the member’s share and their
former spouse’s share of the pension. Your former spouse may or may not
continue to receive the pension after your death, depending on the option
you selected.
What happens if I die or my former spouse dies before I retire?
PensionFacts is published
for the Teachers’ Pension
Plan by the Pension Corp­
oration. This publication is
based on the relevant plan
documents (statutes, regu­
lations and rules). If there
is a discrepancy between
this publication and the
plan documents, the plan
documents apply.
Teachers’ Pension Plan
PO Box 9460
Victoria, BC V8W 9V8
[email protected]
Victoria: 250 953-3022
Toll-free: (Canada and U.S.)
1 800 665-6770
Fax:
250 356-8977
Retired members contact:
Teachers’ Pension Services
PO Box 9460
Victoria, BC V8W 9V8
[email protected]
Victoria: 250 356-9658
Toll-free: (Canada and U.S.)
1 866 876-8877
Fax:
250 953-0431
tpp.pensionsbc.ca
Under the Family Law Act, the default provision is that your former
spouse—if they are a limited member—will be entitled to 50 per cent
of the pension benefits earned during your relationship if you die before
starting to receive your pension. However, there may be circumstances
where your separation agreement or court order specifies otherwise
or where a different proportionate share was clarified with the pension
administrator under the former Family Relations Act.
If you have established how your pension is to be divided and your
former spouse dies before you retire and before receiving their share
of the pension, their share will be paid to their estate or nominated
beneficiary. (Your former spouse can only nominate a beneficiary if they
become a limited member; this option is not available if they are not a
limited member.)
What should be included in a court order or separation agreement?
If your pension is to be divided, you and your former spouse must provide
clear direction in the court order or separation agreement about how that
division should be handled. There could be delays in processing your
pension if the pension plan needs to get clarification.
We recommend you discuss the following guidelines with a lawyer:
• Provide the correct name of the pension plan (or plans) to be divided.
• Clearly identify the start and end dates (day, month and year) for the
entitlement period. The Family Law Act normally considers this to be
from the time you started living together until the date you separated.
• Indicate the former spouse’s proportionate share of the pension,
expressed as a percentage. This is normally 50 per cent or less of
the pension earned during the entitlement period, but it can also
be greater than 50 per cent. The plan cannot divide a pension based
on a set dollar amount.
• Explain any other special provisions for dividing the pension that vary
from those under the Family Law Act (e.g., if the division will include
any service purchased after the entitlement date).
Please contact the plan if you have any questions regarding the division
of a pension.
2001-028 TPP SEPARATION DIVORCE 2016.04.21
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