When spouses separate they need to determine how they can equitably retain and or divide their pensions. Pensions usually have significant value and often are one of the spouses’ main assets along with the family residence.
Pensions can be retained by either spouse, divided equally between the spouses or their value can be determined and traded for another asset such as the equity in the family residence.
Pensions are usually one of two kinds, defined benefit or defined contribution. Defined contribution pensions are more common and include all government and public service pensions. The amount the employee and the employer are required to contribute each month is set out in the employment contract and the amount of pension which a person will receive on retirement is not predetermined. A defined benefit pension is similar but the “benefit” or amount of the pension which will be received is limited and determined by a formula typically based on earnings and length of employment.
If spouses want to equalize their pensions “at source” they can apply to have their pensions equalized by their employer for the period of service which is from the date they started living together to the date they separated. The employer will either set up a separate pension account in each spouse’s name or they will determine the value of the spouse’s share and pay this amount into a locked in RRSP of the receiving spouse. If spouses want to trade the equity in another asset such as the family residence the pension needs to be valued. The value of a pension greatly exceeds the spouse’s total contributions which are set out in their annual pension statement as the statement does not include the value of their employer’s contributions nor does it show the present value of the future stream of income.
In order to value a pension properly spouses need to hire an actuary who will provide either a verbal or written report regarding the pension value. This usually costs approximately $800.00 to $1,000.00 per pension and can be obtained within two to three weeks.
At Deborah Todd Law, we understand that pensions are often one of the most valuable assets to address during separation or divorce. If you’re dealing with the division of pensions and divorce matters in Victoria, BC, our team offers knowledgeable and compassionate legal support. Whether you are exploring your rights under divorce law, planning your financial future with family law services, or preparing critical documents like an enduring power of attorney, we are here to assist.
We provide clear advice about pension entitlements, how they may be divided, and the processes involved, all customized to your unique situation. Explore more about the full range of legal services we offer by visiting our areas of practice or start from our homepage.
If you also need guidance on important financial topics like filing estate taxes, our firm provides end-to-end support. You can learn more about Deborah Todd’s professional experience on her LinkedIn profile.
When you’re ready to take the next step, contact us to schedule a consultation. Let’s work together to protect your financial future through experienced and trusted family law services.
