Sharing a CPP retirement pension with your spouse or common-law partner
Maizie worked as a secretary with a local textile manufacturer until she married Harold in 1957.
After the birth of their first child, Maizie decided to leave her job and stay at home to raise their family. She did a lot of volunteer work at her children's schools when they were young and expanded her volunteer activities as the children got older and left home. She decided not to return to her job so she made no contributions to the Canada Pension Plan.
Harold earned a good income at his job. When he was 63, he retired from his job.
Harold applied for his Canada Pension Plan retirement pension the same month he retired. When he applied, he received an information booklet about pension sharing that stated that he could share his CPP retirement pension with his wife.
Harold called the Canada Pension Plan 1-800 number for more information. The telephone agent explained that he could share his retirement pension with his wife. He and Maizie would each receive half of his retirement pension and each would be responsible for paying the income tax on the portion they received. The agent explained that many couples decide to share their pensions in order to reduce their income tax.
So, Harold applied to share his CPP retirement pension with Maizie. Now, each month, Maizie gets half of his retirement pension and he gets the other half. This reduces his income for tax purposes but does not reduce the total amount of the CPP retirement pension that he and Maize receive.
If Maizie had contributed to the Canada Pension Plan, she too would have been eligible for a retirement pension. Their two retirement pensions could have been added together and divided by two, with each of them getting an equal amount.
Case study summary - Sharing a CPP retirement pension
- Maizie and Harold are married
- Maizie stays at home with the children
- Harold works and contributes to the Canada Pension Plan
- Harold retires at age 63 and applies for his CPP retirement pension
- Harold applies to share his retirement pension with Maizie
- Harold and Maizie each receive half of Harold's retirement pension every month