Adjusting benefits following partition

After partition has been carried out, the plan administrator must adjust the benefits accrued in the member's supplemental pension plan (SPP) and voluntary retirement savings plan (VRSP) to take into account the share transferred to the former spouse.

Savings in the form of capital (capital benefits)

Where the amounts transferred to the former spouse, including interest, are taken from the member's savings in the form of capital, the member's account is reduced by this amount.

Savings in the form of a pension (pension benefits)

Case number 1: The member is not retired

Where the amounts transferred to the former spouse, including interest, are taken from the member's savings in the form of a pension, the plan administrator calculates a negative pension, which is recorded in the member's file. At retirement, the pension to which the member would have been entitled had there not been a partition is reduced by the amount of the negative pension.

Example

A member transfers $19 000 from his pension plan to his former spouse. The amount corresponds to a negative annual pension of $5,950, payable at age 65.

From his plan, he is entitled to a pension equal to 2% of his salary multiplied by the number of years of service.

At age 65, he has a salary of $60 000 and has accumulated 35 years of service. Therefore, his pension is 2% × $60 000 × 35 years of service = $42 000.

At age 65, he is entitled to an annual pension of $42 000, from which the negative pension of $5950 is subtracted. He receives $36 050 a year.

Had the member retired at another age, the amount of the negative pension would have been adjusted accordingly.

Case number 2: The member is retired

The member's pension is adjusted downward in proportion to the amount transferred to the former spouse from the value of the pension at the time of partition and taking into account the amounts paid since that date.

Example

A member receives a monthly pension of $1422. The plan provides for a joint and survivor pension, which means that, even if the member does not have a spouse when she retires, this is the amount she will receive. On 15 April 2019, at age 65, she files an application for divorce and agrees to give her former spouse half of the value of the benefits accumulated in her plan on that date. The value is $260 000.

On 15 April 2020, $134 000 is transferred to her former spouse, that is, the expected $130 000, plus $4000 in interest covering the 12 months between the valuation date and the partition date.

A first reduction is applied to take into account the partition of half of the value as at 15 April 2019, so the member's pension is $711 a month.

A second reduction is applied to take into account the fact that, from 15 April 2019 to 15 April 2020, the member received $1422 rather than $711. Recovery of the amounts overpaid (12 payments of $711 + interest = $8650) is distributed over the remainder of her payments, based on an estimated date of death, and the pension is further reduced by $49 a month.

As of May 2020, the member receives a pension of $662 per month ($711 – $49).

Therefore, the longer the time elapsed between the valuation date and the date of payment to the former spouse, and the older the member is, the larger the second reduction will be.

If the plan did not provide for a joint and survivor pension and the member's pension was reinstated, this would have been taken into account in the second reduction, which would then have been a little less.

Other adjustments in the case of the breakdown of a union during retirement

If the member had a spouse at the time of retirement, he or she would have been notified that, after his or her death, his or her spouse would be entitled to a pension until his or her own death (a joint and survivor pension).

Important consideration

At retirement, the spouse could have renounced entitlement to a joint and survivor pension. In addition, in certain plans, the person who is the spouse at the time of the member's death is entitled to the pension. In such a case, the following does not apply.

The spouse loses entitlement to a pension if there is a breakdown of the union during retirement. Two alternatives are possible:

  1. Maintaining the joint and survivor rights

    The member can give written notice to the plan administrator that, upon his or her death, he or she wants his or her former spouse's pension maintained.

  2. Reinstatement of a pension

    It is possible that the promised amount of the member's pension will be decreased at retirement to finance the spouse's pension. It is also possible that the other characteristics of the pension will be different from those of a retiree who is single.

    If the member does not ask the administrator to maintain the former spouse's pension, the member can receive the pension to which he or she would have been entitled if he or she had not had a spouse at retirement. This is called "reinstatement of a pension."

    If partition is carried out on benefits in the pension plan after the breakdown of the union and the member has not requested that the former spouse's pension be maintained, the plan administrator reinstates the pension and calculates the new amount of the pension to take into account the amount transferred to the former spouse.

    However, if partition is not carried out on plan benefits and the member wants to reinstate his or her pension, he or she must contact the plan administrator.

    Example

    If the member had not had a spouse, he would have been entitled to an annual guaranteed pension of $20 000 for 10 years (that is, if he died less than 10 years after retiring, his beneficiary or heirs would receive the payments remaining in the 10-year period).

    Since he is married, he instead receives an annual pension of $18 000, with no guarantee. It is a joint and survivor pension, that is, upon his death, his spouse will receive a life income of $10 800 a year (60% of the pension).

    The member divorces 4 years after retiring, and partition is not carried out on his pension plan. He asks the administrator to reinstate his pension. He receives an annual pension of $20 000. In addition, his plan guarantees that his pension will be paid for at least 6 years.

    Reinstatement takes effect, as the case may be, on the date of the judgment of separation from bed and board, divorce or annulment of the marriage; the date of the dissolution or annulment of the civil union; or the date of the end of the conjugal relationship.

Legal references

The Gouvernement du Québec publishes its Web pages in French. Consistent with the Charter of the French Language and to inform stakeholders outside Québec, this page is also published in English.
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