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We're married. What happens to our pensions if we separate or divorce?
A pension is a plan that pays its members after they retire. Sometimes a pension also pays after a member is fired or laid off, becomes disabled, or dies.
The Canada Pension Plan (CPP) is a special type of pension that is divided separately.
Any other pension that you or your partner had while you were married is a piece of property that is included when calculating an equalization payment. An equalization payment is money one married partner pays to the other to divide the increase in the value of their property during their marriage.
There are some special rules about how to value a pension and how it can be used to make the equalization payment.
Valuing a pension
You can usually apply directly to the pension plan administrator to have it valued.
Dividing a pension
There are now special rules that allow you and your partner to ask the pension plan administrator to divide the pension if you have a court order, arbitration award, or domestic contract. The plan can then pay out the pension immediately to make an equalization payment. It doesn't have to wait until sometime in the future when the plan member retires.
You don't have to agree to the pension plan administrator dividing the pension. You might decide instead that one partner makes the equalization payment with money from somewhere else. For example, you and your partner could sell your matrimonial home and pay equalization out of the sale money.
A court can decide how equalization should be paid if you can't agree.
Choose the right court
There are 3 courts that deal with family law issues in Ontario. These are the:
- Ontario Court of Justice
- Superior Court of Justice
- Family Court branch of the Superior Court of Justice
It is important that you go to the right court. You have to start your case in a court that:
- Deals with the family law issues you need to resolve. For example, the Ontario Court of Justice doesn't deal with divorces or dividing property, so you would have to go to either the Superior Court of Justice or Family Court branch of the Superior Court of Justice.
- Is in the municipality closest to where you or your partner live. But, if your issues include child support, custody, or access, you should go to the court in the municipality where your child lived before you and your partner separated.
If you're not sure which court to go to, call the family courthouse (link is external) in your municipality to ask.