Divorce and Your Pension: The Basics

January 31, 2013
Ron Shulman

Article written by Ron Shulman

When couples divorce, there are many financial and personal issues that must be untangled.  Among the more complex ones, is how a spouse’s pension or pension entitlement is to be treated in the property-division process.

Under Ontario family law, pensions are considered “property” and constitute matrimonial assets that are subject to being divided when a couple divorces.  However, most pensions can only be paid out at a future date once a spouse retires, so that makes it difficult to value and apportion pensions for property-division purposes.  The solution is often found by having the non-pension-holding spouse trade his or her interest in the other spouse’s future pension entitlement, essentially in exchange for a payment up-front.

However, the matter gets further complicated when the pension-holding spouse is later determined by a court to owe the other spouse financial support, due to the particular effect of the marriage on the recipient spouse’s ability to be self-sufficient after the marriage ends.  This gives rise to a potential for what is known as “double-dipping” – and the issue of whether it is fair for the support-paying spouse to have to use post-retirement pension funds to pay support when the recipient spouse has already reaped the benefits of the pension (since it has been included as part of the earlier property-division exercise).    A Supreme Court of Canada decision called Boston v. Boston, [2001] 2 S.C.R. 413 sets out the governing principles in such scenarios, and sets out the applicable exceptions.

Clearly, the treatment of pensions can be very complicated, so it is important for spouses who are divorcing to obtain full and comprehensive legal and accounting advice as to their rights and obligations in this regard.

Shulman Law Firm is a Toronto-area firm of experienced Family Lawyers who can provide practical advice and effective representation in relation to divorce and pensions in Ontario.  Contact us to set up a consultation.