A. I’m sorry for your loss, Ginette. As you may already know, the end of a marriage or partnership does not automatically break all ties between the partners.
Canada retirement plan (CPP) Contributions paid during the cohabitation of spouses or spouses can be shared in the event of separation or divorce. This is called CPP credit allocation, and it may result in a spouse who made lower contributions to CPP receiving a higher retirement pension in the future.
The CPP pays a survivor’s pension in the event of the death of a CPP liable person. Eligibility is that the surviving dependents were legally married to the deceased or their life partner. A legally separated spouse can be entitled to the benefit; however, a divorced ex-spouse is not entitled to a survivor’s pension. As a result, Ginette, you are not entitled to a CPP survivor’s pension.
Before I address the issue of military pensions, let me provide some context to other readers.
When a couple separates or divorces, property is usually shared to balance the spouses. This asset allocation can include a pension plan. A spouse who is not entitled to a pension is entitled to up to half of the pension acquired during the relationship, but can agree to a higher proportion of other assets instead of a pension portion.
If the pension is a defined contribution (DC) pension made up of mutual funds, the breakdown is relatively simple. The corresponding dollar amount can be transferred to a blocked Registered Retirement Savings Plan (RRSP) for the recipient spouse on a tax-privileged basis.
If the pension is a defined benefit (DB) pension with future monthly payments that the pensioner has not yet drawn, the pension must be assessed. An actuarial calculation is carried out to determine the present value of future pension benefits. Part of the pension value can be transferred to a locked RRSP for the non-pensionable spouse, although part can be considered a taxable payment to them. If the non-retired spouse is on a pension plan with their own employer, they can transfer their portion to that plan to increase their future benefits.
If the pensioner has already started drawing his pension, the spouse who is not entitled to a pension can be entitled to part of the monthly payment. Interestingly, the pension income of the non-pensionable spouse could increase after the death of the ex-spouse if there was a survivor benefit at the time of the start of the pension. As an example, consider a pension of $ 1,000 per month that is split 50/50 on divorce and 50/50 after retirement. The spouses would each receive $ 500 per month. If the pension had a survivor’s pension of 60%, if the retiree died, their ex-spouse could get the pension increased to $ 600 per month.