The pension value calculation is complicated as it depends on spouse’s age and years of service, type of pension plan (defined benefit or defined contribution plan) and tax considerations. Moreover, there are many factors which can impact the calculation such as whether or not the spouse is already receiving a retirement income (e.g. a public pension), the combined value of other assets, the existence of a marital agreement, etc.In general, if only one spouse has contributed to the marriage and earned annuity benefits, the spouse will generally be entitled to more money than the other spousal in accordance with the actuarial principle of equitable division unless there is a specific agreement to the contrary. However, in real life situation it is common that people live longer then expected, so that one may become older than the other. So, in general when everything balances out at end of life both spouses will have about same amount regardless of who worked more and contributed more money to their individual pension plan.In some cases divorce can result in loss of pension value especially when there is a lump sum payment combining both spouses old age and survivor benefits which need to be split between two parties after termination of marriage.Spouses generally have equal right to use marital property before division even if they are not living together as they may need some assets such as down payment for house or vehicles or household items. Thus any asset acquired prior to ending of marriage should be allocated 50/50 to husband and wife even if it was purchased with separate funds after separation.In most cases pensions calculaton is complicated by tax consequences so spousal will have only limited ability to change amount received from pension plan after separation as it cannot be deducted from income any longer (and must be reported).
How is pension divided in a divorce in Ontario?
Under the Family Law Act, before separation, the assets and liabilities of marital property are generally divided equally. At the time of separation, a new order for marital property is made based on things like the needs and assets of each spouse.Pensions are an important aspect of property in marriage. This is because they are a potential source of future income for both spouses. The pension entitlement of each spouse is based on their contribution to the pension plan and their contribution to the overall accumulation fund.In order to ensure a fair division of pensions, courts will sometimes require that a participant in a pension plan make a required contribution to the accumulation fund in order to receive a share of the benefits upon divorce. If this is not fulfilled, then there may be no share for non-contributing spouses upon divorce if there is no other survivor.