In British Columbia, pensions are considered family property and are subject to division when spouses separate or divorce. For many couples, a pension is one of the most valuable assets they own, even though it may not be accessible for many years.

Because pensions are complex and often misunderstood, it is important to understand how they are treated under the law and what options are available when dividing them.

The division of pensions in British Columbia is governed by the Family Law Act and the Pension Benefits Standards Act.

Under these laws, the portion of a pension earned during the relationship is considered family property and is generally divided equally between spouses, unless a Separation Agreement provides otherwise.

The pension plan itself is not split in half. Instead, the value or future benefit associated with the period of the relationship is divided in accordance with the law or the terms of your agreement.

Several different types of pensions may need to be addressed in a Separation Agreement.

Defined Benefit Pensions
These pensions provide a fixed monthly income at retirement, based on factors such as years of service and salary. Many government and union pensions fall into this category.

Defined Contribution Pensions
These pensions involve contributions to an individual account by an employee and sometimes an employer. The retirement benefit depends on investment performance. These plans are valued similarly to RRSPs and are typically treated as registered, before-tax assets.

Canada Pension Plan (CPP)
CPP credits earned during the relationship can be divided between spouses. This is handled separately from other pensions and requires a specific application.

Other Pensions
This can include corporate pension plans or international pensions. Extra-provincial pensions may require additional steps to divide, depending on the jurisdiction and plan rules.

Pensions are often emotionally charged, but legally they are treated like other long-term savings.

Only the portion of the pension earned during the relationship is divided. Any pension entitlement earned before the relationship began or after separation is excluded.

This means that key dates matter. The date you began living together, the date of separation, and the periods during which pension contributions were made are all used to determine what portion of the pension is family property.

It is uncommon for pensions, CPP, or registered retirement savings to be excluded entirely, because both spouses typically contribute to future financial planning during the relationship, even if only one spouse earned the pension.

An important concept in pension division is avoiding double dipping.

When a pension is divided as property, the portion of the pension that has already been shared between spouses should generally not be counted again as income for the purpose of calculating spousal support. This helps ensure fairness and prevents the same asset from being used twice.

As a result, once a person begins receiving pension income that has already been divided, that income is often excluded from spousal support calculations. In some cases, this may mean that spousal support ends when pension income begins. In others, it may simply mean that the divided portion of the pension income is not counted. The key principle is that income from a pension that has already been shared should not be used again to support a further claim.

Pension valuation can be one of the most complex parts of property division.

Pension statements often show only contributions, not the true value of the future benefit. For equalization purposes, a proper valuation is often required to understand what the pension is actually worth.

Valuations typically look at the portion of the pension earned during the relationship and may provide both before-tax and after-tax values, depending on how the pension is being compared to other assets.

Because of the technical nature of pension valuation, professional assistance from a family lawyer and an actuary is often required.

Default Method: Sharing Pension Payments at Retirement
The most common approach for defined benefit pensions is to divide the pension at the source when the pension begins to pay.

The non-member spouse receives their share directly from the pension plan administrator when the member spouse retires. This method does not require an upfront valuation and is often used when there are not enough other assets to buy out the pension.

The division is set out in the Separation Agreement and sent to the pension plan administrator for implementation.

In Divii, this option is selected by choosing “divide the pension in accordance with the Family Law Act.”

In some cases, one spouse may buy out the other’s interest in the pension.

This usually requires a formal pension valuation prepared by an actuary, which typically costs between $1,000 and $2,000. The actuary provides a range of values based on expected retirement dates and includes both before-tax and after-tax figures.

Buyouts are often used to balance the value of the pension against other assets, such as the family home. It is important to put the overall value of the family property portion of the pension into Divii. If your pension valuation only values the non-member spouse’s share, you will need to double that figure to reflect the full shared portion.

For defined contribution pensions, the non-member spouse’s share can usually be transferred to an RRSP or a Locked In Retirement Account without triggering immediate tax.

The pension is assigned a before-tax value, similar to an RRSP, and included in the equalization calculation as a registered asset.

A spouse can choose to waive their right to a pension. In that case, no valuation or division is required.

Because pensions are often valuable long-term assets, waiving pension rights should be done carefully and only after obtaining legal advice.

Pensions are often one of the most misunderstood assets in a separation, but the guiding principles are straightforward. Only the portion earned during the relationship is divided, and there are several ways to do so.

Because pension division involves long-term planning, tax considerations, and complex calculations, getting professional advice is often essential. With the right guidance and clear documentation in your Separation Agreement, pensions can be divided fairly and in a way that supports both spouses moving forward with confidence.