Know Your Options
Pension plan members can choose between different options for survivor benefits. In BC, a plan member with a spouse must take a pension that pays a survivor benefit to the spouse if the member dies first (unless the spouse gives up that right by signing a prescribed form). After a separation, a retired plan member may not want the survivor benefits to go to their former spouse but they can’t just transfer the survivor benefits to someone else. The former spouse can’t give up their survivor benefits unless they fill out a prescribed form (known as Form P5).
A separation agreement or court order dealing with division of pension benefits must be sent to the plan administrator, along with various forms:
Request for Designation as Limited Member (Form P2). Complete this form to make the non-member spouse a limited member of the plan. (See Spouse becomes a limited member.)
Request for Transfer from Defined Contribution Account (Form P3). Complete this form to allow the non-member spouse to apply for a transfer of the share of benefits that are in a defined contribution account. (See Immediate transfer — Defined contribution plan.)
Request by Limited Member for Transfer or Separate Pension (Form P4). Complete this form to allow a limited member to choose whether to receive their share of a pension as a lump sum transfer or a separate pension.
Canada Pension Plan
Benefits under the Canada Pension Plan (CPP) can be divided the year following separation, or after right after a couple divorces. Each spouse is entitled to receive half of all CPP contributions made during the relationship. This is called “credit splitting”. Each partner can then decide when to take CPP, using their separate account.
An agreement or court order is not necessary to divide CPP credits: they will be divided automatically unless there is an agreement not to do so. On application, the government divides CPP contributions based on when the marriage relationship began, to the year before you separated. Dividing CPP benefits requires an application to the federal government. (See ISP1901 on the ‘Service Canada’ website for an application kit).