Canada Pension Plan (CPP) - Credit Splitting Upon Divorce or Separation
- Important Information for Common-law Partners
- Canada Pension Plan Credit Splitting
- Requesting Canada Pension Plan Credit Splitting
- A shorter version of this information is available as an online brochure.
Please note: If you and your spouse or common-law partner have contributed only to the Quebec Pension Plan (neither of you has ever worked outside Quebec), this information about credit splitting is not the one you need. Please call an office of La Régie des rentes du Québec for information on Quebec Pension Plan credit splitting.
1. What are my Canada Pension Plan pension "credits"?
Canada Pension Plan keeps a record of your "pensionable" earnings, and the contributions you pay on them over the years . These become your "Canada Pension Plan pension credits".
Your pension credits build up as you continue to pay into the Plan. When you apply for a benefit, Canada Pension Plan uses these credits to calculate your entitlement. Generally, the more credits you have, the higher your Canada Pension Plan benefit will be.
2. What is "credit splitting"?
The Canada Pension Plan recognizes that in a legal marriage or common-law relationship, both spouses or common-law partners share in the building of their assets and entitlements. Among these are Canada Pension Plan pension credits.
When a relationship ends, the Canada Pension Plan pension credits which the couple built up during the time they lived together can be divided equally between them. This division is called "credit splitting".
Credits can be split even if one spouse or common-law partner did not pay into the Canada Pension Plan.
3. Who is a "spouse"?
For the purpose of the Canada Pension Plan, a "spouse" is the person to whom you are legally married.
"Common-law partners" is defined as two people, regardless of sex, who have lived together in a conjugal relationship for at least one year.
4. How does credit splitting work?
See below for examples of credit splitting. But first, here is how it works.
Generally, the credits of one person, the lower earner, are increased and the credits of the other, the higher earner, are reduced by the same amount.
The longer you and your former spouse or common-law partner were together, and the bigger the difference between your earnings while you were together, the greater the exchange of credits will be.
If your "pensionable" earnings and your spouse's or common-law partner's were the same while you were together, there would be nothing to exchange. So a credit split would not be done.
In a case where both spouses or common-law partners are already receiving a Canada Pension Plan benefit and both benefits would be reduced, then the credit split would not be done.
5. Are couples in an ongoing relationship entitled to credit splitting?
No. However, they may be eligible for "assignment" or pension sharing.
6. Which credits are actually split? And what is "cohabiting"?
Canada Pension Plan splits only the credits for the time you cohabited, and works in calendar years.
Most of the time, "cohabiting" in a conjugal (married) relationship means living together. But sometimes people who are still in a relationship have to live apart for a time, for instance, because of illness or work. In such a case, you and your spouse or common-law partner would still be considered as cohabiting.
Working in "calendar years" means dealing with complete years from January to December. In calculating a credit split, Canada Pension Plan:
- includes the whole calendar year for the year you began living together;
- does not include any of the calendar year for the year the relationship ended.
7. How will I be affected by credit splitting?
Normally, the more you as an individual earn and contribute to the Canada Pension Plan over the years, the greater the number of "credits" you will have. The more credits you have, the higher the benefit will be (when you become entitled).
But credit splitting between former spouses or common-law partners means that for the period they lived together, Canada Pension Plan credits can be "equalized".
Splitting credits with a former spouse or common-law partner is generally to your advantage if you were the lower wage earner during your years together. It would increase your Canada Pension Plan credits, meaning that you would get a larger benefit when you become eligible (or if you are getting one now).
It is also to your advantage if you have never been a wage earner. In this case, credit splitting could give you Canada Pension Plan credits which you have never had before. These new credits could make you eligible for your own Canada Pension Plan benefits.
Credit splitting is generally to your disadvantage if you were the higher wage earner. It would reduce your credits, meaning you could get a smaller benefit when you become eligible (or if you are getting one now).
8. Does it matter when our relationship ended?
Yes. The rules for Canada Pension Plan credit splitting have changed over time.
Before January 1, 1978
Canada Pension Plan credit splitting did not exist before January 1, 1978.
For those who were legally married, only: if you were separated before that date but your marriage legally ended after that date, you may qualify (see following).
Between January 1, 1978 and December 31, 1986
On January 1, 1978 credit splitting became available, for legal marriages only, in cases of divorce or annulment.
If you were divorced or your marriage was annulled between those dates, you were entitled to have your credits split if:
- you and your former spouse had lived together for at least three consecutive years;
- the divorce or annulment was recognized by Canadian law; and
- you applied for the credit split within three years of your marriage ending.
Note, if you did not apply within three years of the end of your marriage, Canada Pension Plan can still split the credits if both you and your former spouse agree in writing.
On or after January 1, 1987
As of January 1, 1987 access to Canada Pension Plan credit splitting was expanded and some of the existing rules were changed. The rules are slightly different in each situation.
If your marriage ended in divorce or annulment on or after that date, your credits could be split if:
- you lived together continuously for at least one year, and
- you, or your former spouse, notifies Canada Pension Plan and provides the necessary information and documentation (there is no time limit).
If you separated on or after January 1, 1987 (and are not divorced), you can have the credits split if:
- you lived together continuously for at least one year;
- you have been separated for at least 12 consecutive months; and
- you apply, or your separated spouse or common-law partner applies (there is no time limit, unless your former spouse or common-law partner dies - in that case you must apply within three years of the date of death).
If your common-law relationship ended on or after January 1, 1987 you can have the credits split if:
- you lived together continuously for at least one year;
- when you apply, you have been living apart for at least 12 consecutive months (unless your former spouse or common-law partner dies in that time); and
- you apply within four years of the date you began living apart.
Same-sex former common-law partners may be eligible for credit splitting if the separation occurred after July 31, 2000.
An application can be made after the former common-law partners have been separated for one year, or earlier if one partner dies. An application must be made within four years of the separation.
9. What if I gave up my rights to my former spouse's Canada Pension Plan credits in a spousal agreement?
Canada Pension Plan rules on spousal agreements changed on June 4, 1986.
Before June 4, 1986
If you signed an agreement before that date specifically giving up your right to split your Canada Pension Plan pension credits, then a credit split cannot be done. However, if it was a general agreement that did not mention Canada Pension Plan pension credits, you may still be entitled to some credits, if you were the lower income earner.
On or after June 4, 1986
If you signed an agreement on or after that date, even if it says you specifically gave up your right to split Canada Pension Plan pension credits, in most cases the Canada Pension Plan, as a third-party to the agreement, is not bound to its provisions and Canada Pension Plan can still split the pension credits.
There are exceptions: some provincial laws allow couples specifically to agree not to split Canada Pension Plan pension credits. Currently, this is the case in British Columbia, Alberta, Saskatchewan and Quebec. So if you signed such an agreement in one of those provinces, Canada Pension Plan might not be able to split the credits. For information contact Social Development Canada or, if you contributed to the Quebec Pension Plan, an office of La Régie des rentes du Québec.
10. Do we have to have our credits split?
Since January 1, 1987, once Canada Pension Plan has the necessary information about your legal divorce or annulment, your Canada Pension Plan pension credits must be split, unless there is a valid spousal or common-law union agreement signed in one of the provinces mentioned in question 9.
But, if you are separated or have left a common-law relationship, there may be a credit split only if you (or your former spouse or common-law partner) choose to apply for it. In these cases only (not in cases of divorce or annulment) the applicant can ask to withdraw the application within 60 days of being notified of the credit split.
When you become eligible for a Canada Pension Plan pension or benefit (or if you already are receiving one), the actual impact of a credit split could be large or small.
Here is an example where the impact would be large.
Christine and Daniel were married for 20 years. During the entire time, Christine stayed home to raise their three children.
They divorced last year. Because she had no earnings, Christine had not paid into the Canada Pension Plan and she would not have been entitled to any Canada Pension Plan benefits.
However, Christine asked Canada Pension Plan to split the pension credits. Canada Pension Plan divided the credits Daniel had earned during their marriage, equally between them.
Christine now has a Canada Pension Plan account with her own credits. When she reaches retirement age and applies for her retirement pension, she will be entitled to one. If she becomes disabled, she may also be entitled to a Canada Pension Plan disability pension provided she meets all the eligibility criteria. When she dies, her survivors may be entitled to Canada Pension Plan survivor benefits.
If Christine starts working and contributes to the Canada Pension Plan, she will increase her Canada Pension Plan account and receive a larger benefit in the future.
Having her own credits is also very important to Christine because after the divorce she was no longer eligible for Daniel's Canada Pension Plan survivor benefits, when he dies.
Daniel's credits are now reduced, but he is still eligible for Canada Pension Plan benefits. The longer he continues to work after the credit split, the less the impact of the split will be. If Daniel is already getting a benefit, his payments will continue but they will be reduced.
In other cases, the impact of a credit split may be small. For instance, there are features of the Canada Pension Plan that protect your benefits from being reduced if you have some low earning years. These features are called "drop out" provisions.
If the time that you and your spouse or common-law partner cohabited overlaps one of your "drop out" periods, then there may be very little impact from the credit split. But the "drop out" period would still work to your advantage.
Here is such an example, based on the "child-rearing drop out" provision.
Hiroko and Robert were married for 20 years. Hiroko worked outside the home until they had children, but she earned less than Robert. After the first child was born and until the youngest was seven, Hiroko stayed home to raise the children so she had no earnings during that period. Then Hiroko went back into the paid labour force and, for the last 12 years, she has been earning almost as much as Robert.
Hiroko and Robert were divorced last year and their credits were split.
When Hiroko applies for a Canada Pension Plan pension the calculation of her benefit will be based on her earnings as well as those she received as a result of the credit split. The years she stayed home to raise the children will be "dropped out" if they are below the minimum level.
Robert's Canada Pension Plan credits were reduced with the credit split, but he is still eligible for Canada Pension Plan benefits. The longer he continues to work after the credit split, the less the impact of the split will be. If Robert is already getting a benefit, his payments will continue but they will be reduced.
These are just two examples. Each situation is different. For information or advice, contact Social Development Canada.
12. Do I need to apply for credit splitting?
In the case of a legal divorce that took place on or after January 1, 1987 you do not have to apply. Canada Pension Plan simply needs to be notified that the divorce occurred and given certain information (with documentation), such as the length of time you lived together.
In all other cases, you do have to apply.
In the following sections, both methods are simply called "requesting" a Canada Pension Plan credit split.
13. Who can request a Canada Pension Plan credit split?
Either you or your former spouse or common-law partner may request the credit split. As well, a representative (such as a lawyer) may make the request. In the case of a separation, a signature of one of the spouses or common-law partners is required.
14. If I make the request, what rights does my former spouse or common-law partner have?
The information you give Canada Pension Plan (for example, the length of time you lived together) affects the credit split. So that information will be provided to your former spouse or common-law partner. Both you and your former spouse or common-law partner have the right to challenge the information and to appeal any decision about a division of credits.
15. What if I have remarried, or am living in a new common-law relationship? Can I ask for credit splitting?
Yes, you can still ask to split Canada Pension Plan credits with your former spouse or common-law partner.
16. How do I request a credit split?
17. If either of us has contributed to the Quebec Pension Plan, can our credits still be split?
Generally, yes, but there are some differences between the Canada Pension Plan and the Quebec Pension Plan. Over the years, if either of you worked in both Quebec and other provinces, then you have paid into both plans. In these cases, credit splitting is more complex. Both laws must be checked to see if credits can be split in your case and to establish the period of the split.
If you are living in Quebec and you want to request a credit split, you should call an office of La Régie des rentes du Québec which administers the Quebec Pension Plan. If you are living in any other province or territory, you should call contact Social Development Canada for advice.
18. What if we have only contributed to the Quebec Pension Plan?
If both you and your former spouse or common-law partner have only worked in Quebec, please call an office of La Régie des rentes du Québec which administers the Quebec Pension Plan for information on Quebec Pension Plan credit splitting.
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