Announcement

Collapse
No announcement yet.

Question on DC Pension Split

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Question on DC Pension Split

    I have a mediation agreement with my ex that stipulates we split my pensions for the time we were married. The one Defined Benefit plan was no problem, that is taken care of. Unfortunately the Defined Contribution plan has not been acted on. When we split in 2003 the value was $4900. Today the value is approximately $20,000. I am turning 60 soon and will not be working so I would like for her to get her split but I am unsure as to the amount she gets. I have seen various examples of how to determine value but they all use an arbitrary figure (such as 5% per year) that is used on the amount of money she would have received in 2003 ie 2450 x 5% x 11 years = approximately $4200. Does anyone have better information that I should be using. It seems silly to employ an actuary for such a small amount. I would also like to transfer this amount to an RSP or similar vehicle in her name to avoid the tax implications. Any & all advice would be most appreciated.

  • #2
    but I am unsure as to the amount she gets.

    Right off the bat, the pension split if from the date of marriage, to the date you split. This following blurb might be of importance to you as you are yet to retire:

    If you and your spouse/former spouse were married and separate after retirement, the spouse at retirement retains the right to a survivor pension. Ontario law requires that the value of the pension you earned during your time together be included in the calculation of net family property. There is no requirement to divide the pension, only to consider its value in the division of all family property.
    https://www.caatpension.on.ca/en/ret...ion-or-divorce

    More info here for ya......

    https://www.fsco.gov.on.ca/en/pensio...breakdown.aspx

    Comment


    • #3
      Thanks very much but I still find that open to some interpretation. On the one hand she is only entitled to the $2450 that would have been hers in 2003. However there would have been growth of that money minus the payments that were added over the ten years by my employer. It isn't clear to me what is a fair value.

      Comment


      • #4
        Also we will be divorced prior to my retirement. We are just in the process of starting that, but after 10 years there is no rush. It is just that I would like the divorce final before I retire.

        Comment


        • #5
          What was the reason for the eleven year delay? If it was the ex's fault, I would say she is not entitled to any growth, just the amount from 2003. If it was your fault, then growth should be included in the split.

          Your pension administrator may be willing to do all these calculations at little to no cost to you. It needn't be an independent actuary unless your ex insists, in which case she can foot the bill. As you noted, the amount is not large enough to warrant it.

          Comment


          • #6
            It is most definitely my fault. I could say that I didn't understand but it was up to me to find out. The reason I picked 5% as the annual interest is I believe that is what the teachers use as a base to calculate the pension owed in their plan.

            Comment


            • #7
              It is most definitely my fault.
              Self awareness and admittance are good qualities to have. Obviously you don't want to drag this out any longer, and there is a reason why you want this done before you retire.....

              So make it your pet project for the next couple of weeks to get this sorted.....is your ex doing the same thing then?

              Comment


              • #8
                She has her own reasons for wanting a divorce. She is planning on getting married again. Hopefully I can get this sorted in the next few weeks. In any case I won't be retiring until after the divorce.

                Comment


                • #9
                  "Your pension administrator may be willing to do all these calculations at little to no cost to you."
                  Ha! You think they would? Not a chance. I just spoke to four people there & they sound like a bunch of parrots. They will only act on a court order! I will not involve them at all as they have made clear what they will & will not do. I am going to my bank tomorrow & will talk to them about transferring money from my RSP to one for her. Maybe they can advise me.

                  Comment


                  • #10
                    I just spoke to four people there & they sound like a bunch of parrots.
                    Ahahahahaha....a bit of trivia for ya, did you know that there are about 372 species of Parrots? Ironically, a "bunch of parrots" as you so eloquently put it, is known as "company"

                    Comment


                    • #11
                      Well this 'company' is paying for a lot of people to answer the phone & tell you they can't help you. I will post tomorrow & let you know what the bank has to say.

                      Comment


                      • #12
                        You have a "then and now" pension. It is complicated.

                        One other thing is, is that it is taxed in YOUR hands, not hers. So she only gets the net amount. Now, her entitlement is small so the tax implications won't be that high anyhow.

                        I suggest you bite the bullet and just offer her her half gross without any tax implications in one lump sum. I suggest this because the only thing worse than shelling out $2500 is doing so over 10 fracking years and writing a stupid cheque every month. I'd do it just to part ways and never have to deal with her again.

                        Comment


                        • #13
                          I searched around a bit for historical returns, and found that the 'couch potato' portfolios average yearly returns for 10 years are between 6.2 to 6.8 from 2003 to 2013. This is net of management fees. So just tack one more year of the same % (being generous) on to that, gives you 1.065^11 = 1.999. Assuming all gains are tax sheltered, that means the 2003 value would have doubled by 2014.

                          That's the amount you would remove from your plan - what taxes are taken off (now or later) should be taken from her share.

                          http://canadiancouchpotato.com/wp-co..._1994-2013.pdf

                          I can't see any value to using an actuary - the issue is how to determine what % to use, and unless you can get the actual yearly return rates from your pension fund, then you will have to make some assumption - AND get your ex to agree to that assumption.
                          Last edited by dinkyface; 01-23-2014, 07:26 PM.

                          Comment


                          • #14
                            Thanks to all of you for your input. I am going to the bank tomorrow & will seek advice there. Right now I am inclined to agree with dinkyface & offer to put $5000 in an RSP for her. If that can't be managed then I will offer $5000 net of taxes. That is a nice round number & would make a nice wedding present for her.

                            Comment


                            • #15
                              That is a nice round number & would make a nice wedding present for her.
                              Awwwww...sounds like you can't wait to marry her off, are you going to be the best man?

                              Here comes the bride

                              Comment

                              Our Divorce Forums
                              Forums dedicated to helping people all across Canada get through the separation and divorce process, with discussions about legal issues, parenting issues, financial issues and more.
                              Working...
                              X