Ending a relationship – and what it means for your pension
If you and your spouse separate or divorce, you'll need to decide how to divide your shared family assets, including your pension.
Under BC law, a pension is shared family property, just like a house, car or bank account. If your spousal relationship ends, your former spouse may be entitled to an equal share of the pension you earned while in the relationship.Dividing financial assets is complicated, and there are many complex decisions to make. It's wise to have an independent professional, such as a lawyer, help you and your former spouse decide what options to consider and how best to divide your family's financial assets.
In this article, we've assumed you and your former spouse have agreed to divide your pension benefit. Here's what that might mean for both of you.
If you separate before you start receiving your pensionYour former spouse can receive their share of your pension as soon as you reach your earliest retirement age or when you leave BC's Teachers' Pension Plan. They may be able to choose how they want to receive their share of the pension – as a locked-in lump-sum transfer payment to a registered retirement plan (such as an RRSP) or as a lifetime monthly pension.
When you inform us of your divorce or separation, we'll send a letter to your former spouse inviting them to become a limited member of the plan. If they choose to do so, we'll pay their portion of your pension directly to them, and adjust your pension payments to reflect that arrangement. Your pension payment will be less than it would be if you were still in the spousal relationship.(If your former spouse does not become a limited member , we'll pay your full pension directly to you, and you'll be responsible for making sure your former spouse receives their share each month.)
If you die before you start receiving your pension, your former spouse will receive their proportionate share according to the directions in your complete, signed separation agreement or registered court order.
If your former spouse dies before they start receiving their share of your pension, we will pay their share to their estate or beneficiary. This only applies if they are a limited member of the plan and have not yet started receiving their share of your pension, or if their estate or beneficiary(ies) becomes a limited member.
The Family Law Act clarifies division of assets when relationships break down. Under the act, common-law spouses are treated the same as married spouses when dividing a pension. This means common-law spouses have the same rights and responsibilities as married spouses regarding pension benefit entitlements.
If you separate after you start collecting your pension
If you separate after you start collecting your pension, you can't choose a different pension option, and neither can your former spouse. Whatever pension option you chose will also apply to them. For example, if you chose a joint life pension with a 10-year guarantee, your former spouse will receive their share of this same pension option.
Your former spouse may want their share of the pension paid directly into their bank account each month. They can do this by applying to become a limited member of the plan.
If you die, your former spouse may continue to be paid their share of the pension, depending on the pension option you chose.
If your former spouse dies, you will receive their remaining share. If you are considering a new spousal relationship, the pension option you chose only applies to you and your former spouse. Your new spouse is not eligible for a benefit unless your former spouse waived their rights when you started to receive your pension.
What you need to do
As you can see, dividing a pension is complicated: there are many issues to consider and decisions to make.
Explore the resources on this site to learn more about what's involved and the actions you need to take. This could include:
- Giving us permission to share information about your pension with a third party, such as a lawyer
- Letting us know how to divide the pension by sending us a complete, signed separation agreement; registered court order; or Form P9 Agreement to have benefits divided under part 6
- Having your former spouse apply to become a limited plan member
- Having both you and your former spouse update your beneficiary information
- Updating your names and contact information if they have changed as a result of the separation