Partition process for a pension plan
Partition as such is the second step in the partition of pension plan benefits. This step results from:
- valuation of a member's benefits, and for former married spouses, the portion that was accumulated during marriage
- the judgment of divorce, of separation from bed and board or of civil annulment of marriage (former married spouses) or an agreement made by former de facto (common law) spouses
The Civil Code and the Regulation respecting supplemental pension plans set requirements as to the method of carrying out partition and the amount to transfer to a former spouse. To avoid any unpleasant surprises, it is important to know the requirements.
When and how to apply for partition
Former married spouses
The application for partition can be made as soon as the time period for appealing the judgment has expired, that is, 30 days after the date on which the judgment was rendered.
Former de facto (common law) spouses
The application can be filed as soon as the former spouses make an agreement.
Civil union spouses
The Supplemental Pension Plans Act entitles civil union spouses to have partition carried out on their pension plans if their union is annulled or dissolved.
However, the method by which that right will be exercised has not yet been determined.
How partition is carried out
Partition of a pension plan is not automatic unlike the Québec Pension Plan. One of the former spouses must file an application with the plan administrator.
Main points to be aware of
Apply for partition at the earliest possible date
It is better to apply for partition as early as possible. If not, the member's former spouse may have difficulty obtaining the money owed to him or her.
This situation could arise if, for example, after employment ends, the plan member transfers the benefits before the application for partition has been submitted to the plan administrator. The administrator cannot act because there is no longer any money in the member's account. It is also possible that the administrator cannot act because the member has died before the application is received.
Prescription time period
The prescription time period consists of 10 years in which to act on a judgment that makes provision for partition of a pension plan. Thus, if the former spouse applies for partition more than 10 years after the judgment was rendered, the plan member can contest it.
Take a close look at the situation before making an agreement or filing an application with the court
Partition of benefits in equal shares is not always the most appropriate solution.
Before reaching such a decision, spouses should consider several factors, including:
- the way in which the spouse could spend the money received
- applicable taxes
- the consequences of partition on both the member's and the former spouse's retirement income.
To find out more...
Other useful link...