can savings made after separation be considered as income during SS review?-

[jimthecanuck]

I'm new to the forum.

Following separation, I have agreed to provide SS according to the SSAG, until such time as it is reviewed or changed due to a material change (such as my retirement when I start drawing on my government pension). My pension has already been equalized for the years of marriage, and so, according to Boston I expect that pension income from those years will not have to further shared.

Since separation, I have continued to make mandatory superannuation payments to my pension (about $10k annually). The SSAG calculation does not allow for the deduction of mandatory superannuation contributions from NDI calculations for the purpose of calculating SS. So in takehome pay I have the NDI minus the mandatory superannuation.

My argument when I retire will be this. Since I have been saving money from my NDI after separation, the resultant pension income (adjusted for the employer contribution) from these post separation savings should not be included as income when the SS is reviewed. This would seem to be a form of double dipping as these savings were from my NDI which means that means I have already paid my STBX for them through SS.

The flip side is to look at the situation of my STBX. Supposing she had put money into an RRSP post-separation. Would cashing out those post-separation RRSPs be included as her income when recalculating SS?

Either way, it would seem unfair to have to share cashout of post-separation savings.

Appreciate any views.

[stripes]

So when you retire, you want to deduct the portion of your pension income attributable to post-separation savings from the income figure used to calculate SS, on the grounds that these savings were already included in your income in the years before retirement?

It sounds logical to me, but I think it would be an accounting nightmare to figure out how much of your pension is attributed to post-separation savings. Do you think the financial difference it would make is worth the money it would cost to get you and your ex to agree on a formula to hive off this portion of your pension? Perhaps your could agree to a lower ongoing SS payment in exchange for you not deducting the post-separation savings from your pension when you retire.

[nfc4ever]

When my parents divorced they had a similar issue, my father had a pension from government, and my mother's was from a private corp. The agreement stated that SS was to stop once my father died, reached 65 or retired whichever came first.

Its been about 10 years since retirement, and my mother hasn't challenged it.

Realistically the pension is an asset, you already gave her a fair share during equalization, you paid SS on your contributions so she got her share of those too. So the asset should be yours free and clear of any burden to her. I'm aware that there are special considerations with government pensions, where you need a good lawyer.

[SingingDad]

Yeah this is the great double dipping problem that happens in both SS and CS. In both cases you pay support as if the funds are available both when you are contributing to your fund and again when you are the recipient of your pension.

It isn't fair and really needs to change.

Consider the following situation:

After separation a person contributes to an RRSP fund (amount doesn't matter) they pay support based on those amounts being available for support even though their not.

After retirement when they are withdrawing from the RRSP they are required to pay support on the total amount taken out, which includes the contributions they were making prior to retirement that were assumed to be available.




The reason they don't allow retirement savings as deductions because there is the risk of people sheltering income from support through RRSP contributions, but it really isn't fair for the person required to pay support.

It's even worse when you consider someone who has to take money out of an RRSP early (for whatever reason), they are not only paying more tax but also paying support on the contributed amount twice.




A possible procedure for reducing post retirement support amounts could be:

1) Separate the the amounts contributed prior and during the marriage from those made afterwards.

2) Figure out what % of your total retirement savings come from the contributions you made after separation.

3) Reduce post retirement income by that percentage for the purpose of calculating support.



The easier solution is to allow a reasonable deduction for retirement savings (eg 1/2 the amount allowed by CRA seems reasonable to me), but what do I know.

Anyways... more of a vent than an answer.

Cheers!