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  • Pension and child support

    Good day...new to the forum and hoping someone can help as I cannot get a straight answer for this question...

    When my X and I settled our divorce, part of my equalization to her was a payout that included a lump sum amount for the pension I'd earned while we were married. In other words, she was fully and completely compensated for the portion of my future pension I earned while together and signed off on any future claim to it.

    5 years later, I have retired from my previous job and will be collecting my pension as soon as vacation time runs out. I have started a new job and very shortly I will be "double-dipping" so to speak...collecting my pension and my new monthly salary.

    Since my X took the lump sum payout, am I required to report my pension income AND my new salary when it comes to child support calculations? It seems like that would be double-dipping on her part...she will be getting substantially more child support from me even though she already benefited from a lump sum payout. She did not have to add that payout to her income, nor did she ever have to report on what she did with it (she invested in real estate, and of course I haven't benefited in any way from capital gains on that).

    A couple other points to clarify my situation. There was never any spousal support awarded as my X and I earned roughly the same amount. My X is getting remarried in a couple months, and her household income will essentially be double mine. SO the argument that the child support is strictly to "equalize" the two households doesn't hold water.

    IF I do not have to add pension income to regular income, then we will be looking at total equity and neither of us will pay the other. We split custody 50/50.

    Any advise/help would be greatly appreciated. Thank you.

  • #2
    If your ex signed something that said "I relinquish any future claim to my former spouse's pension", then you might be able to argue that in your case CS should be based only on salary and not on anything other source of income.

    If not - what are you going to report to CRA on your next tax return? CS is based on total income, not salary - so if your pension goes into your line 150, that's what CS is calculated on. In my case I have employment income and I also have royalty income (though not a whole lot), and those two together make up my guideline income for CS.

    The fact that your ex is getting remarried is irrelevant, as is her total household income. My ex has remarried with a household in much higher than mine, but I still pay him offset CS as my individual income is higher than his. The fact that no spousal support was awarded is also irrelevant to CS.

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    • #3
      Your main problem is that while your spouse is not entitled to any further benefit from your pension, you are talking about CHILD support here, not spousal support. Your child support is based on your line 150 from your tax return, which will include the pension income. Your child is entitled to be supported based on your true income.

      If you think your ex will use the increased CS money to her own benefit, you could try holding off on drawing from the pension (is this possible?) until the child is grown and CS no longer applies.

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      • #4
        dont exchange tax info and let her take you back to court. the cost of this might make her amicable towards a settlement

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        • #5
          Unfortunately I can't delay drawing from the pension. I understand that it's TOTAL income that's used to calculate CS...however in this case it truly feels like she's double-dipping as she has never been, and never will be, accountable for the money I give her "for the kids". If she'd taken that lump sum I gave her to pay her out of the pension and invested it, making a regular monthly profit from that investment, I doubt I would have benefited in the least from a reduction in child support by her boosting her total income. I've never missed a CS payment and provide the best possible household I can for my kids...the reason I decided to pay her out on my pension was so she didn't take a monthly bite out of it for the rest of our lives. However, in retrospect that probably would have been a better idea since she would have had to report her portion of MY pension on her yearly income.

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          • #6
            What's done is done - you used your pension for equalization, for reasons that made sense at the time, and it sounds like you don't have any agreement in which she relinquishes any further claims on the pension, so if you're drawing it, it will count towards your income. The fact that you used it for equalization has no bearing on your CS commitments - equalization is a one-time, one-off arrangement to divide resources between the former spouses; CS is an ongoing commitment to the children, not the spouse.

            If there's no way you can defer your pension (have you talked to your HR department about that?), it sounds like your choices are a) lie and not report it in your taxes; b) somehow dissociate yourself from the pension and give it up entirely so you don't receive it at all; c) draw your pension, enjoy having more disposable income for yourself, and accept that with this extra income you're going to be paying more CS.

            Option a is a bad idea, option b is probably not even possible, so you're left with option c. I'm guessing that if you're retiring from one job with a substantial pension, your kids are not young, so there won't be many years of paying more CS.

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            • #7
              When it comes to child support, the income of your ex's new partner does not come into play at all. That being said, exactly how much are you paying her for support, and how many years do you have left? The answer might reveal just how much it is all worth the fight.

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              • #8
                The pension split was an equalization payment and has nothing to do with C/S.

                Had you not got another job, c/s would be based solely off of your pension. Had you not had to start taking your pension, C/S would be based solely off of your employment income. However, you are now working and collecting a pension, thus C/S is based off of your aggregate income.

                The only way to avoid paying extra c/s is to simply not tell the ex about the pension income. But if/when that cat gets out of the bag, you will likely get taken to court for increased c/s and almost certainly be hit with arrears. In other words, it isn't a good idea.

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                • #9
                  I figured as much...but wanted to check. The one point I wanted to make clear is she signed off on any and all claims to my pension after I paid her out. That included present and future claims. But in the end I guess it doesn't make much difference.

                  Btw...my kids are 14 and 11 so I have many years of CS ahead.

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                  • #10
                    You decided to pay your ex out by splitting the pension... you could have taken out a loan for equalization or something and let the pension alone. The fact that you paid her out of the pension means little now for CS purposes. She was equalized from the marriage and how she choose to spend that money was her choice.

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                    • #11
                      There is no double dipping going on. The fact that you gave her pension of equalization has nothing to do with child support, as equalization, spousal, and child support are all distinctly different compenents within a divorce. Where they tend to cross over each other are cases where one takes an imbalance in equalization offset an imbalance in spousal support, but that is not the case here. The fact that your pension is now your income has nothing to do with the fact that you happened to use that same pension as equalization. The fact that you can't control how she spends the money on your kids is a common problem that all payors of child support (including myself) have to pretty much suck up and deal with. My ex receives $900 for two kids, we're 50-50, and she lets her idiot boyfriend and his two kids live in her house almost rent free. My money is likely subsidizing his lifestyle. There is nothing I can do about that. It grinds my gears, but I can't let it bug me.

                      Again, I ask, what is the total that you pay monthly in your 50-50 situation, and how many years do you have left?

                      If you are that concerned about where the money is going, try and convince your ex to put that child support into RESPs for your kids, if you truly believe that she doesn't need the money due to the fabulous wealth of her new husband.

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                      • #12
                        I didn't split the pension with her...what I DID do was pay her a lump sum so that when the time came to draw from the pension, I wouldn't have to split any of it with her. She did not have to show that lump sum as "income" when it came to calculation of CS for the year we split, but I have to show my monthly pension cheque as income now. Again...it just seems like a way to double dip. There has been at least one court decision disallowing double dipping like that when it comes to spousal support. Apparently that ruling doesn't apply to CS though.

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                        • #13
                          The monthly amount is just over $1000. I don't imagine my ex will agree to the RESP idea, although I think it's a good one. For the record, combined household income for my ex and her asshole fiancée will be over $200,000, which is substantially more than my single income. Not that it seems to matter, other than to make me grind my teeth when she talks about equalizing households.

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                          • #14
                            The ruling doesn't apply to child support because child support is for the children. The fact that you don't think it is being spent on children is a separate issue. If you are correct, that is indeed unfortunate, but it still does not mean that there is double dipping.

                            So, what exactly are you on the hook for?

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                            • #15
                              with the addition of pension income it makes a difference of approx. $700/month out of pocket. Might not seem like a lot, but to a guy that went from potentially mortgage free to $300,000 in debt thanks to a cheating spouse, it's just another kick in the head.

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