Partition of benefits accrued under a pension plan in the private, municipal or university sector for de facto spouses
The value of benefits accrued under a pension plan in the private, municipal or university sector can be partitioned following the separation of a couple in a de facto union.
For partition to be carried out, the former spouses must reach an agreement within 12 months following the end of their union. The agreement must later be sent to the administrator. In the absence of such an agreement, the plan administrator cannot carry out partition.
It must be noted that the agreement cannot provide that the former spouse will be awarded more than 50% of the value of the total benefits at the end of the conjugal relationship, with interest.
Pension plans in the private, municipal or university sector
Information on partition only concerns pension plans for which members' benefits are subject to the
Supplemental Pension Plans Act.
Supplemental pension plans go by many names:
- pension plans
- registered pension plans
- pension funds
- employer pension plans
- private pension plans.
A worker's benefits accrued under a pension plan are subject to the
Supplemental Pension Plans Act if he or she holds a position, in Québec, under provincial jurisdiction in the private, municipal or university sector. The benefits of certain workers in the parapublic sector are also subject to it.
It is
the place where the member works, specifically where he or she worked when accruing benefits under his or her plan, which determines whether Québec's Act applies. It is the case if the person works in Québec, even if his or her pension plan is administered outside the province or if it is registered with a supervisory agency outside Québec.
The recognition of a de facto union
A member of a supplemental pension plan must not be married to or in a civil union with another person in order to be recognized as de facto spouses. However, the de facto spouse of the plan member may be married to or in a civil union with another person.
Important!
The separation from bed and board does not end a marriage. If the plan member was married to another person and they obtained a judgment of separation from bed and board, they are still considered as being married, and the de facto spouse of the plan member will not be recognized as such.
The
de facto spouse is the person with whom the plan member has been living in a conjugal relationship:
- for at least 3 years
- for at least 1 year if a child has been or is to be born of your union, if they adopted a child together or if one of them adopted the child of the other during the union.
The steps for partition of benefits accrued under a pension plan in the private, municipal or university sector
The Statement of Benefits is the only document that indicates the total value of the benefits accrued by an individual under a pension plan in the private, municipal or university sector.
One must not rely on the annual statement of the plan to determine the benefits. The statement does not specify the value as at the date on which spouses require it. In addition, that value is not necessarily calculated using the method required for partition.
An application for a Statement of Benefits can be filed with the plan administrator as soon as the spouses have ended their de facto union.
Requesting the Statement
For a member to obtain his or her Statement of Benefits, Retraite Québec offers forms that contain all the required instructions so that the request is complete.
Fees may be required for the production of the Statement.
The form must be sent to the administrator of the pension plan and not to Retraite Québec.
The plan administrator must produce the Statement of Benefits within 60 days after receiving the request.
To contact the plan administrator
Consult the last annual statement or use the
consultation of Pension plans supervised by Retraite Québec online service to obtain the name and contact information of the plan administrator.
Benefits are not partitioned automatically. An application must be filed with the plan administrator.
It is not recommended to wait until retirement to file for partition. It is best to do so as soon as possible after the breakdown of the union.
Requesting partition:
In order for the administrator
to carry out partition, Retraite Québec has an
Application for Partition Between Former De Facto (Common Law) Spouses form, which contains all the required instructions so that the request is complete.
Fees may apply for the partition.
The form must be sent to the administrator of the pension plan and not to Retraite Québec.
The administrator will pay the amount indicated in the agreement, with interest.
Payment methods
The former spouses partition the amounts accrued under the pension plan of the plan member, and not the pension that will be paid to him or her in retirement. The former spouse will therefore not receive a retirement pension.
Except in certain cases, the former spouse cannot receive his or her portion in cash. He or she can transfer the amount to a locked-in retirement account (LIRA) or life income fund (LIF) to generate retirement income.
The Statement of Benefits requested from the pension plan administrator indicates the choices offered that the former spouse has to carry out partition, as well as the documents and the information to provide based on each choice. If the former spouses did not request the Statement, they must contact the pension plan administrator to obtain that information.
The former spouse will be able to receive his or her portion in cash in the following cases:
- if one of the spouses has not lived in Canada for at least 2 years
- if the plan member can receive a lump-sum payment (for example, if he or she has a not locked-in account under a simplified pension plan)
- if the amount receivable (capital + interest) is less than 20% of the
maximum pensionable earnings (MPE) for the year in which he or she receives payment. The
MPE is established in accordance with the
Act respecting the Québec Pension Plan. For example, in
2024, the
MPE is $68 500. The member's former spouse can receive a lump-sum payment if he or she is entitled to an amount of less than $13 700.
Any cash received will be taxable. However, income tax can generally be deferred by transferring it directly to a registered retirement savings plan (RRSP) or to a registered retirement income fund (RRIF).
To contact the plan administrator
Consult the last annual statement or use the
consultation of Pension plans supervised by Retraite Québec online service to obtain the name and contact information of the plan administrator.
Impact of the partition of benefits accrued under the pension plan
Payment of an amount drawn from his or her pension plan to the former spouse reduces by an equivalent value the member's benefits accrued under his or her plan. Furthermore, before deciding to carry out partition, its impact must be taken into consideration, particularly on the following aspects.
Interest and key dates
Interest will be added to the amount paid to the former spouse, even if it is not provided for in the judgment or agreement. It is calculated as of the date on which the conjugal relationship ended until the date on which the money is paid to the former spouse.
If the member is retired, the time elapsed between the date on which the conjugal relationship ended and the date on which an amount is paid to his or her former spouse is taken into consideration in the calculation of the pension after partition.
For example :
The spouses agree that the member will pay half of the value of his or her pension of $2000 per month on the date on which the conjugal relationship ended.
The pension will first be reduced by $1000 per month.
It will also be reduced by an additional amount, to take into account the fact that the member received $2000 per month instead of $1000 per month, between the date on which the conjugal relationship ended and the date on which the amount agreed upon, with interest, is paid to his or her former spouse.
Therefore, the partition in equal parts of a retiree's pension will decrease his or her pension by more than half after partition. The more time there is between the valuation date and the partition date, the smaller the pension will be.
In the event of death
As a rule, the former spouse loses his or her right to receive a benefit when a member dies. As each situation is specific, it is necessary to contact the plan administrator for more information.
If the plan member is retired and he or she had a joint and survivor pension (it was expected that the former spouse would receive a pension following the member's death), it is possible that certain choices are available to the member, such as, increasing the amount of his or her pension. The member must contact the plan administrator for more information.