Throughout the course of your marriage or common-law relationship, both you and your spouse will usually have made contributions to the Canada Pension Plan.
So what happens to those CPP credits when you decide to get a divorce or separate?
The answer may surprise you: The cumulative CPP contributions of both spouses during the marriage can be equally divided, in a process called “credit splitting”. However – and this is an important point – the credits can be split even if one of the spouses did not make CPP contributions at all.
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Eligibility for CPP credit splitting will vary, depending on whether you were formally married or living together common-law, and depending on when your divorce or separation took place.
Generally speaking, if your marriage ended in divorce or annulment on or after January 1, 1987, then you may be able to request credit splitting provided you lived with your former spouse for at least 12 consecutive months, and you or your former spouse provides the necessary information to Service Canada. In such cases, there is no time limit for making such a request or submitting the information.
Similarly, if you had a common-law relationship that ended on or after January 1, 1987, you may qualify for a credit split if: 1) you lived with your former common law for 12 consecutive months or more; 2) you have been living separate and apart for at least 12 months; and 3) you or your former partner apply in writing within 48 months of the date you started to live apart.
There are different eligibility rules if your marriage or common-law union ended prior to January 1, 1987, and also for situations where you and your spouse separated after that date, January 1, 1987, but are not yet formally divorced. You do not give up your eligibility to request credit splitting simply by remarrying or living with someone new.
What are the Repercussions?
The effect of requesting a credit split will depend on your circumstances, and may vary according to the income fluctuations of both you during the course of your marriage, as well as changes during the period after separation and before the credits were split. No two circumstances will be identical, and the net effect of the credit split may be small or large, according to those variations, and may financially benefit one of you while operating to the detriment of the other.
In general, however, the effect of having applied for credit splitting is that the divided credits that were accumulated during your marriage are attributed to the Record of Earnings for each of you and your spouse, which is then used to determine the current or future CPP benefits to which you will be entitled.
How to Apply
If you want to request a credit split, you must apply by completing a CPP Credit Split Form (ISP1901) and submitting it to Service Canada. Once you or your spouse has submitted the request, the credit split becomes mandatory and cannot be stopped or “undone”.
Separation and Divorce can be a difficult and uncertain time. Our team of Toronto family lawyers is dedicated to relentlessly pursue our clients’ interests, and getting exceptional results. Contact us for a consultation.