Don’t Forget to Apply for a Division of CPP Credits

Nelligan O'Brien Payne gratefully acknowledges the contribution of Paula Lester, Student-at-Law in co-writing this blog post.

Many people are not aware that, upon separation, divorce, or annulment of a marriage, they can apply for a division of their spouse’s, or former spouse’s, Canada Pension Plan (CPP) credits that accumulated during the time that the spouses cohabited. This is an important claim to consider if your spouse accumulated more CPP credits than you did during the time that you cohabited.

If you have obtained a divorce, or your marriage was annulled after January 1, 1987, you are entitled to a CPP pension credit division if you cohabited with your former spouse for at least 12 consecutive months. Although CPP pension splitting is mandatory in such cases, you or your former spouse must notify Service Canada and provide the government with the required information and documentation. There is no time limit for notifying Service Canada or for providing the necessary information.

If your marriage ended in a divorce or annulment prior to January 1, 1987, different rules apply. In that case, you must have cohabited with your former spouse for at least 36 consecutive months and, at the present time, you can only apply for a CPP credit division if your spouse waives the time limit requirements, as such applications should have been completed within three years after separation.

If you are still married, but have been separated from your spouse for at least 12 consecutive months, you may apply for a CPP pension credit division if you previously cohabited with your spouse for at least one year. This option is only available, however, if your separation occurred on or after January 1, 1987. There is no time limit to apply for such a division, unless your former spouse passes away, in which case you must apply for a CPP credit division within three years of your spouse’s death.

If you were in a common law relationship and have been separated for at least one year, you may apply for a CPP pension credit division if you previously cohabited with your former common law spouse for at least one year. In order to obtain a CPP credit division, you must apply within four years of the date of separation.

In a CPP credit division, the CPP credits that both you and your spouse accumulated during each year that you cohabited are added together and then divided equally between you and your spouse. The credits are then attributed to you and your spouse’s respective Records of Earnings, which are used to determine the amount of current or future CPP benefits to which you and your spouse may be entitled. The result is usually that one spouse will see an increase in the CPP benefits to which he or she is entitled, while the other spouse will see a decrease in such benefits. It is possible, depending on the situation, that you or your spouse may become entitled to CPP benefits through the credit division, even if you were not previously entitled to such benefits.

In some provinces, namely Saskatchewan, Quebec, British Columbia and Alberta, spouses can enter into a written agreement that prevents the spouses from applying for a CPP pension credit division, provided certain requirements are met. However, in Ontario, no such agreement is allowed; therefore, spouses living in Ontario cannot contract out of their right to apply for a CPP pension credit division.

For more information on division of CPP credits, visit the Service Canada website.