If a generous pensioner shared $50,000 of pension from a provincially registered plan over 5 years between separation and settlement, upon a division at source at the end of the 5 years, the plan, under Ontario Regulation 287/11, section 39, is compelled to assume that the sharing has not occurred, and to slightly decrease what the pensioner would receive and to slightly increase what the spouse would receive after the division at source.
The following example assumes:
Both pensioner and spouse separated at 60 and settled at 65
A pension of $20,000 per year and a FLV of $285,000
No survivor’s pension (to simplify the example)
All of the pension was accrued during marriage
Sharing of $10,000 a year for 5 years with a present value of $45,928
There are two solutions to this.
(1) Credit the pensioner with equalization amounting to the present value at separation of the shared payments, here $45,928. However, the spouse may not want to give up immediate equalization in return for slightly higher monthly payments over the remainder of their life.
(2) Reduce the percentage of the pension to be allocated to the spouse in Part D of Form 6 such that when the plan retroactively adjusts the Division At Source for “missed” payments the retroactively adjusted amount is the original one desired. This requires an actuarial calculation.
