Q: I am currently separated and I would also like to apply for the CPP benefit split. How much more CPP would I get doing this? How do I find out?
A: CPP pension splitting is available to spouses who are applying to receive the Canada Pension Plan as a means to equalize their retirement incomes. But even those with former spouses should be aware of how they can proactively ensure that they are getting the CPP benefits that they deserve.
Contributions that were made by you and your former spouse while you were living together may be eligible to split and may result in an increase in your pension if you contributed less than your spouse during those years, Leona. In much the same way assets may be split in the event of a marriage breakdown, future pension entitlement–whether a private pension or the CPP–are also relevant for purposes of a post-marriage equalization.
The relevant period of cohabitation for purposes of the pension split does not include:
– when one of you was younger than age 18;
– when one of you was older than age 69; or
– when one of you was already receiving the CPP retirement pension.
A spousal agreement can generally not prevent a credit split, though in some provinces (Quebec, Saskatchewan, Alberta and British Columbia currently) couples can agree not to split CPP in the event of a marriage breakdown.
After a divorce, you have to notify Service Canada about your intention to split CPP credits. Since it sounds like you are not divorced and simply separated, Leona, you must be living separate and apart for at least 12 months in order to apply.
If you were common-law, a CPP pension split is available after 12 months of cohabitation and upon a relationship breakdown where you have lived apart for at least 12 months. There is a 48-month deadline post-separation in this case, which can be waived in the unlikely event your ex-partner agrees in writing.
The relevant form for applying for a CPP pension split is the CPP Credit Split form (ISP1901) available on Service Canada’s website. You will need to provide information about yourself, your partner and the length of your relationship and cohabitation.
After applying, your former partner will be contacted to either confirm or dispute the information that you provide, Leona. Both partners then have a right to challenge or dispute the information provided by the other and to appeal Service Canada’s decision about pension credits.
How much you ultimately get will be based on your respective contributions to the CPP during your eligible years of cohabitation and your future contributions up until the time you begin your pension. But the first step is to make sure that you apply in a timely fashion to get the process started, Leona.
A previous version of this article stated that there was a 36-month post-divorce deadline to apply for pension splitting. This deadline no longer applies. MoneySense regrets the error.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.