division of pension assets

T

thatsit

New member
Hello to all,
This is my first post.
Basic details;
· Long term marriage (26yrs)
· Separated 3 years ago
· Am pushing for the separation agreement as I need to get this settled so I can understand when I can retire (if ever!!)
· FLV for hybrid defined benefit and contribution pension plan has been obtained for ‘date of separation’
· Spouse has no pension plan
· We both have RRSP assets
I am trying to understand division of pension assets. Is it a straight division as of ‘date of separation’, or do you consider how the asset may have grown since separation?
I am interested in how the courts view equalization of pension assets, not concerned about what is ‘fair’.
Thank you in advance for any responses.
 
Hi there;

Had to go through this. It is to the sep. date.

You will need to have the pension valued. Huge sticker shock for me. Some pensions will do this for free.

Once valued, half the value (date of marriage to sep date) will be transferred into an RRSP account.

If you had 26 years in...spouses half= 13...plan to work longer. If your former spouse had significant rrsps or a pension of their own you might have saved your pension.

Hope this helps,
 
We are in a similar situation. Pension is still intact because it follows the old rules and could not be divided upon breakdown of marriage. So we know what the value is as of date of separation.... when we pay it out we do not attribute any growth since the date of separation?
 
Thanks for sharing your experiences,

I had the pension evaluated ($800 for this service) according to the new rules. I have enough cash (barely) from the sale of the house to pay cash to keep my pension intact. I was debating whether to propose giving the cash equivalent (after tax) for her half of the pension or that we divide at source. It would be to my benefit to give the cash equivalent, but it would be to her benefit to divide at source and transfer to an RRSP equivalent. On further reflection last night I will propose to divide at source as we are dividing a pension and she should get a 'pension' equivalent. She does not want the cash equivalent.
The after tax cash equivalent will not generate the same amount of income as I would receive from the half of the pension that is transferred as the growth will not be sheltered from tax.
I will be working much longer than I had planned.
I am more fearfull of the implications of spousal support. This is the next item for discussion.
Despite all the turmoil, Life is still good.

Best wishes to all
 
If you give her cash now from your share of the house to keep your pension, what you are really trading is the ability to buy a new place to live now vs having a full retirement later. Stuck renting into your retirement vs investing in an asset via a mortgage. Just something to keep in mind.

Also, if your pension is federal, make sure any unequal division of it with other assets making up the difference is WELL-DOCUMENTED, or your ex can come back any time in the future and ask for what she ought to have received. Unless you show documentation proving that she got other assets instead, the federal pension administrator WILL divide it for her.
 
Thank you for your comments

With the change in my life situation I have come to the realization that for me owning a house is not required. Previously with four children growing up I considered the house as essential for providing a 'home' for my family. The children are all now independent and after separation I find that all this extra space is not needed. A small basement apartment is sufficient. I plan to live modestly (now and in retirement), sock away cash for the next 5 years and build a sufficient nest egg so that I can retire.

Even after dividing the pension at source, equilization of RRSP assets will require me to transfer about $20K to her. I fully understand your point on documentation of this division and have good records of our financial position at separation.

I feel good that after 3 years my ex and I are making progress on the financial separation. We have been open in our sharing of information and she has received professional advice on her situation. It all feels good now, however, I realize that once this is formalized in a separation agreement and Independent Legal Advice is obtained some lawyer (once he sees the size of our assets) may stir the pot.

Best Wishes to all,
 
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