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Canada Pension Plan Splitting on Divorce or Separation

Married couples who separated or divorced in 1978 or later and common-law couples who separated after 1986 may be able to apply to share their former spouse’s Canada Pension Plan. When CPP credits are split, one person will receive an increase in their CPP while the other person will have a decrease. The rules vary depending on the relationship and the timing, and are summarized as follows:

    1. If divorced after 1986, you are eligible, regardless of what is stated in your separation agreement, in most provinces. At the time of writing, Quebec, Saskatchewan, Alberta and British Columbia allow you to override this rule in your agreement.  In other provinces, there is no time limit.
    2. If divorced from 1978 to 1986, and you lived together for at least 36 consecutive months, then you are eligible if you apply within 36 months of the date of divorce. After 36 months, you can apply if your spouse is still living and both parties mutually agree to split the credits.
    3. If still married but separated for at least 1 year, you are eligible and there is no time limit to apply except no later than 36 months after spouse’s death.
    4. If you were living common-law in 1987 or later, lived together for at least 12 consecutive months, and you have been separated for at least 12 months (unless your spouse has died), then you qualify if you apply within a time limit of 48 months. After 48 months, you can still apply if both parties mutually agree to split the credits.

Credit splitting calculations exclude years before age 18 and after age 70; for periods when one person is receiving a retirement or disability pension; and for years when the total pensionable earnings is less than two times the CPP basic exemption. For example, for a person receiving a retirement or disability pension, credit splitting is permitted but only the credits for years when the person was not in receipt of these pensions are included in the split calculation. Furthermore, no retroactive adjustments are made to pension income already received.

Credit splitting may have an adverse effect on both partner’s pensions is some situations where the Child Rearing Dropout Provision applies, based on an example provided in this article.

See further information on the Canada.ca CPP credit splitting web site, where you may also download an application.

Blair Corkum, CPA, CA, R.F.P., CFP, CFDS, CLU, CHS holds his Chartered Professional Accountant, Chartered Accountant, Registered Financial Planner, Chartered Financial Divorce Specialist as well as several other financial planning related designations. Blair offers hourly based fee-only personal financial planning, holds no investment or insurance licenses, and receives no commissions or referral fees. This publication should not be construed as legal or investment advice. It is neither a definitive analysis of the law nor a substitute for professional advice which you should obtain before acting on information in this article. Information may change as a result of legislation or regulations issued after this article was written.©Blair Corkum