Divorce impacts more than your current finances—it can also affect your future retirement security. In Ontario, pensions are considered part of your family property and may be subject to division when you separate from your spouse. This means the benefits you’ve been building for years could be shared, even if your spouse has their own retirement plan. Understanding how pensions are valued and divided is key to protecting your long-term financial stability.
Overview of Pensions and Divorce Laws
In Ontario, pensions are treated like other assets when dividing family property. Whether you’re part of a workplace pension plan or have contributed to a private plan, its value must be included in your net family property calculation.
Types of Pensions
- Defined Benefit Pension: Pays a set amount upon retirement, based on factors such as salary and years of service.
- Defined Contribution Pension: Your employer and/or you contribute to an account that grows over time; the final benefit depends on contributions and investment performance.
How Pensions Are Valued in Divorce
Pension administrators provide a Family Law Value—a specific calculation of the pension’s worth for family law purposes. This valuation considers contributions during the marriage and discount rates for early payment.
Division of Pension Assets Under Ontario Law
Rather than splitting the pension directly, Ontario law allows for:
- Transferring the spouse’s share to their own retirement account, or
- Paying a lump-sum settlement from other assets to avoid dividing the pension itself.
Survivor Benefits and Rights
If your pension includes survivor benefits, these may need to be addressed in your separation agreement. Decisions about whether to maintain or waive these benefits can affect both parties’ future security.
Impact on Retirement Planning
Dividing your pension could mean adjusting your retirement age, savings goals, or lifestyle expectations. This is why pension division should be considered alongside other retirement assets.
How to Protect Your Pension Rights
- Request an official pension valuation early
- Work with a family lawyer experienced in pension division
- Consider trading other assets to keep your pension intact
- Ensure the settlement complies with pension legislation
Working with Actuaries and Financial Experts
Actuaries can provide independent valuations, explain complex calculations, and help you compare settlement options. Financial advisors can help you revise your retirement plan post-divorce.
Common Disputes and How to Resolve Them
Disagreements often arise over valuation dates, calculation methods, or whether to divide the pension at all. Clear documentation, expert valuations, and skilled legal negotiation can help avoid costly disputes.
Your pension may be one of your most valuable assets, and how it’s handled during divorce can shape your future retirement. By understanding your rights, obtaining an accurate valuation, and making informed choices, you can protect your long-term financial well-being.
Join our free webinar, How Will Divorce Affect My Pension?, on September 9 at 5PM ET to hear from family lawyers and financial experts on safeguarding your retirement during separation.
