Some Plan provisions may be impacted by the pension legislation that is applicable based on your province of employment.
Separation or divorce if your province of employment is Ontario
Many people go through a breakdown in their marriage or common-law relationship during their working career. If this applies to you, it is important to keep in mind that your pension may represent a significant part of the family property you've built during your relationship with your former spouse.
If you and your former spouse were married, the Ontario Family Law Act requires that the value of the pension you earned during your time together be included in the calculation of net family property. There is no requirement to divide the pension, only to consider its value in the division of all family property.
For common-law spouses, there is no requirement under Ontario family law to divide net family property (including the value of any pension assets) on breakdown of their spousal relationship. You may however decide to do so.
Pension law and family law are complex, and they interact in a number of ways in the case of spousal relationship breakdown. As a result, it is strongly recommended to obtain advice from a lawyer with experience in this area before making any decisions regarding the division of your pension.
In Ontario, the rules, which apply to new cases as well as past cases without a pre-2012 legal agreement providing for the division of pension, include:
- Prescribed valuation performed by the Plan - The Plan is required to calculate the Family Law Value of a member’s pension accrued during the relationship, using prescribed formulae, and provide this to both the member and their former spouse.
- Immediate settlement of benefits - Where a member and their former spouse agree or are required to divide the value of the member’s pension, the spouse’s portion of the Family Law Value will be immediately split from the member’s entitlement. Though settled immediately, the former spouse’s share may be transferred to a locked-in account until retirement age.
- Prescribed process and forms - Members, their former spouses and the Plan will be required to use several detailed forms created by the Financial Services Commission of Ontario (FSCO), now the Financial Services Regulatory Authority of Ontario (FSRA), throughout the process of applying for a valuation through to instructing the Plan on their decision about the division of the Family Law Value of the pension.
Step 1 – Request the Family Law Value of your pension
a) Either you or your legally married former spouse may request the Family Law Value of the pension you earned during your time together by filing an application with the Plan using the FSCO Family Law Form 1 – Application for Family Law Value. In the case of common-law relationships, only the member and not the common-law former spouse can file the application. Regardless of who files the application, both you and your former spouse will receive copies of the Statement of Family Law Value at Step 2. The application should be sent to the CAAT Pension Plan together with the documents listed in Part G of the form as well as any relevant forms listed in Step 1b).
b) The following forms will need to be included with the application (Form 1) if the reasons listed apply to your situation:
FSCO Family Law Form 2 – Joint Declaration of Period of Spousal Relationship
Use this form, which must be signed by both parties, to verify the starting date of your spousal relationship and of your separation date if acceptable documents (such as a marriage certificate or separation agreement) are not available. If you and your former spouse disagree on the date your relationship began or ended, do not use this form. Instead, complete Appendix A of the application (Form 1).
FSCO Family Law Form 3 – Contact Person Authorization
Include this form with the application to authorize a lawyer or other person to communicate with the Plan on your behalf regarding the valuation and division of your pension. You and your former spouse must each submit Form 3 if you have different contact people. This form is not for use by those acting under power of attorney for property or by court order. Persons in these roles should instead identify themselves on Form 1.
Step 2 – CAAT Plan provides Family Law Value
Within 60 days of receiving your completed application, we will provide both you and your former spouse (married or common-law) with copies of the Statement of Family Law Value of your CAAT pension. If your application was incomplete, we will request the missing information from you and/or your former spouse before issuing the Statement of Family Law Value. The Family Law Value of your pension is the value of the pension you built during your relationship with your former spouse. The calculations for determining it are set out in pension law, and for defined benefit plans such as the CAAT Pension Plan these calculations can be complex.
Step 3 – Determine if pension will be divided
You and your former spouse determine how the Family Law Value of your pension is to be treated within the context of all of your family property. If you agree that your pension will be divided, the maximum amount that your former spouse can receive is 50 per cent of the Family Law Value of your pension. You then get a court order, enter into a domestic contract or seek a family arbitration award that spells out the agreement you have reached. Advise the CAAT Plan of the treatment of the Family Law Value of your pension in the next step.
Step 4 – Inform the CAAT Plan of agreement
If your pension will be divided, your former spouse informs the Plan by submitting a copy of your court order, domestic contract or family arbitration award together with one of two FSCO forms (Form 5 or 6, depending on whether or not your pension is already in pay), which will be included with your former spouse’s copy of the Statement of Family Law Value at Step 2. In the form, your former spouse will elect from their options for receiving their portion of the Family Law Value of your pension. The available options and the impact on your pension are as follows:
If you are an active or deferred member (not yet receiving your pension), your former spouse will receive their share of the Family Law Value of your pension as a locked-in lump sum that can be transferred to a registered retirement vehicle. Your pension will be offset to reflect the Family Law Value transferred to your former spouse. If you are retired and already receiving your pension, it will be divided into two pensions, one paid directly to your former spouse and the other to you. You will be advised of the amount by which your pension will be reduced to offset the pension to be paid to your former spouse. You and your former spouse will each receive a separate T4A tax form, and be subject to separate income tax withholding that reflects each of your financial circumstances.
If your pension will not be divided, either you or your former spouse may send to the Plan FSCO Form 7 -- No Division of Family Law Value/Pension Assets, which must be signed by both of you. A copy of this form will be included with the Statement of Family Law Value (at Step 2). Blank copies of the forms that will be sent to your former spouse at this step in the process are also posted on our website for your information.
Get the forms
Visit the Forms page to see a full list of the forms relating to divorce and splitting your pension.