CPP Pension Sharing and Credit Splitting

• What is pension sharing and how does it work?
• How do I apply to share a pension?
• When does pension sharing end?
• Is CPP credit-splitting the same as pension sharing?
• What is credit splitting?
• How does credit splitting work?
• Is there an advantage to having CPP credits split?
• Does the date the spouses separated affect credit splitting?
• Are people required to split their CPP credits?
• What if I have signed an agreement giving up my rights to a CPP credit split?
• Can I ask for a credit split with my ex-spouse or ex-partner if I remarry or live in a new common-law relationship?
• How do I apply or request a CPP credit split?

Q - What is pension sharing and how does it work?

Married or common-law and same sex couples (including registered domestic partners who have lived together for at least 12 months) who:

• are not separated or divorced (you must still be together as a couple);
• are both at least 60 years of age; and
• receive (or apply to receive) their CPP retirement pension can share (or assign) the portion of their pension benefits earned during the time they have lived together. This is called the shareable pension amount.
  

Any retirement pension based on income earned before the couple started living together is not affected by pension-sharing. Pension sharing adjusts the amount of monthly retirement pension each spouse/ partner receives from CPP. The shareable pension amount will be divided between the spouses/partners. If only one is a CPP contributor, they share that one pension. The overall benefits paid do not increase or decrease with pension sharing.

Sharing may result in tax savings because each spouse/partner only pays tax on his or her portion of the pension.

Q - How do I apply to share a pension?

You can get the application form from the Service Canada website - click here. You must provide proof of marriage or common-law relationship to be approved.

Q - When does pension sharing end?

If you are married, the pension-sharing arrangement will end after:

• a year of separation, or
  
• if you separate or divorce, or
  
• if you or your spouse dies. 

If you are living in a common-law or same sex relationship, the pension-sharing arrangement will end if you separate or if you or your partner dies.

If you both agree in writing you and your spouse or partner also ask for the arrangement be cancelled at any time.

Q - Is CPP credit-splitting the same as pension sharing?

No. You can ask for pension sharing when you and spouse/ partner are still living together. You can only ask for credit split if your relationship ends through separation or divorce.Click here for information about CPP credit splitting.

Q - What is credit splitting?

The CPP recognizes that in a legal marriage or common-law relationship (including registered domestic partners who have lived together for at least 12 months), both spouses or common-law partners share in the building of their assets. Among these are CPP pension credits. When a relationship ends, the CPP pension credits which the couple built up during the time they lived together can be divided equally between them. This division is called "credit splitting". Credit-splitting has been available since January 1, 1978.

Q - How does credit splitting work?

The only credits that are split are those that were built up during the time the couple lived together. Credits earned after separation are not split.

Most often the credits of the lower-earning spouse/ partner are increased and the credits of the higher-earning spouse/ partner are decreased by the same amount. The longer the couple were together and the bigger the difference between their earnings when they were together, the greater the credit split. If two people had the same amount of credits, no credit split would need to be done.

CPP can do a credit split even when one partner did not pay into CPP. The pension credits are still split equally between the partners. In this case, credit splitting could give the person who did not pay into CPP credits when he or she had none before. These new credits could make the person eligible for his or her own CPP benefits. CPP will not do a split if both spouses/ partners are already be receiving a CPP benefit and both benefits would be reduced by performing a credit split.

Q - Is there an advantage to having CPP credits split?

The lower wage earner often will have an advantage from the credit split because: it would increase his or her CPP credits and he or she would get a larger benefit when he or she becomes eligible (or if he or she is currently getting CPP benefits). If he or she has never been a wage earner the credit splitting may make the person eligible for CPP benefits he or she would not have had before the credit split.

Credit splitting is usually to the disadvantage of the higher wage earner because: it would reduce the person's credits and he or she may receive a smaller benefit when he or she becomes eligible (or if he or she is currently getting CPP benefits). You should contact Service Canada to find out how a credit split would affect your CPP benefits.

Q - Does the date the spouses separated affect credit splitting?

If your marriage legally ended or you became divorced after January 1, 1987 to be eligible for a credit split you must have:

• lived together continuously for at least one year, and
• at least one spouse needs to tell CPP of the separation or divorce and provide the necessary information and documents. A representative for one of the spouses, such as a lawyer, may also notify CPP and provide documentation. If neither spouse tells CPP of the divorce or annulment the credits are not split. However, there is no time limit; you can notify CPP at any time unless your ex-spouse dies - in that case you must apply within three years of the date of death.
  

If you were married and separated on or after January 1, 1987 (and are not divorced), credits can be split if:

•  you lived together continuously for at least one year;
•  you have been separated for at least 12 consecutive months; and
  
• you or your spouse applies (a representative, such as a lawyer may also apply).
  
• There is no time limit for making an application, unless your ex-spouse dies - in that case the survivor must apply within three years of the date of death.
  

Contact Service Canada if your marriage ended before January 1, 1987.

Common-law Couples or Registered Domestic Partners who have lived together for at least 12 months:

If you were in a common law relationship that ended after January 1, 1978, but before January 1, 1987 there would be no credit split. Credit splitting only applied to married couples at this time.

If you were in a common-law relationship that ended on or after January 1, 1987 the credits can be split if:

• you lived together continuously for at least one year;
  
• when the application is made, you had been living apart for at least 12 consecutive months (unless you ex-common-law partner dies in that time); and
• the application is made within four years of the date you stopped living together. The time limit may be waived if you and your ex-common-law partners both agree in writing.

Q - Can couples who have been in a same sex relationship apply for credit splitting?

Same-sex former partners may be eligible for credit splitting if the separation occurred on or after July 31, 2000. CPP credit splitting did not exist before July 31, 2000 for same-sex couples. Either partner can make the application.

Credits can be split if:

• the partners have been separated for one year, or earlier if one partner dies; and
•  the application is made within four years of the separation. The time limit may be waived if you and your ex-partner both agree in writing.

Q - Are people required to split their CPP credits?

Divorce or annulment:

Since January 1, 1987, when CPP has the necessary information about your legal divorce or annulment, the CPP pension credits must be split, unless you have a valid spousal or common-law union agreement signed in a province where CPP must follow the agreement (see the question below).

Separated:

If you are separated or left a common-law relationship, there may be a credit split only if you or your ex-spouse or ex-partner chooses to apply for it. In these cases the applicant can request that the application be withdrawn within 60 days of being notified of the credit split.

Q - What if I have signed an agreement giving up my rights to a CPP credit split?

There are different rules depending on the date that you signed the agreement. If you signed an agreement before June 4, 1986 specifically giving up your right to split CPP pension credits, then a credit split cannot be done. If it was a general agreement and did not specifically mention CPP pension credits, you may still be entitled to some credits, if you were the lower income earner. To find out more information about a specific case contact Service Canada.

If you signed an agreement after June 4, 1986 even if you specifically give up your right to split CPP pension credits, a credit split may be possible. This is because CPP is considered a 3rd party to the agreement. This means that CPP was not directly involved in the agreement, did not sign it and is not bound by the agreement. CPP does not have to follow the agreement and can still split the credits. There are exceptions to this that vary by province. Nova Scotia does not have any exceptions. If you live outside of Nova Scotia and signed a separation agreement giving up your right to split CPP pension credits you should contact Service Canada.

Q - Can I ask for a credit split with my ex-spouse or ex-partner if I remarry or live in a new common-law relationship?

Yes. You do not lose your entitlement in the division of credits because you are in a new relationship.

Q - How do I apply or request a CPP credit split?

You can get an application kit from the Service Canada website - click here -  or call them and ask them to mail a kit to you.

For more information on credit splitting visit the Service Canada website at http://www.rhdcc-hrsdc.gc.ca/eng/isp/pub/factsheets/credit.shtml.


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