Manitoba Labour and Immigration

Division of Pension Credits in the Event of a Breakup of the Marriage or Common-Law Relationship

Revised August 2004

The main objective of the Pension Benefits Act is to safeguard employees' rights to benefits promised under private pension plans. Over the years, the rights of employees to obtain information have increased. There is now more protection for the spouse or common-law partner of a contributing member. In addition, employees who leave their jobs now have new options regarding transfers of their pension credits.

EFFECTIVE JANUARY 1, 1984, all divorces, legal separations and written agreements involving the splitting of family assets of a marriage or common-law relationship are subject to a 50/50 split of pension credits accumulated by one or both spouses or common-law partners.

Which years under the pension plan are included in the credit split?

The pension benefit credits or payments due that are subject to an equal division are those that accrued

• in the case of a common-law relationship, from the first day of the period in which the parties cohabited with each other in a conjugal relationship and which continued until they became common-law partners, or
• in the case of marriage, from the date of marriage or, if there was a period in which the parties cohabited with each other in a conjugal relationship and which continued until they were married, from the first day of that period,

until the date that the parties began living separate and apart.

For spouses who began living separate and apart before June 30, 2004, the pension benefit credit or payments due subject to division are those from the date of marriage.

Can Pension Credits Be Received  as a Cash Refund?

No, once the pension credit split has been determined the non-member spouse or common-law partner has the option of transferring their share to:

1. a Locked-In Retirement Account, (LIRA)
2. a Life Income Fund, (LIF) 
3. a Locked-In Retirement Income Fund, (LRIF)
    or
4. a registered pension plan if the spouse or common-law partner is a member, provided that the plan will accept the transfer and administer the provisions of The Pension Benefits Act.

Will this law affect persons who applied for a separation or divorce before January 1, 1984?

No. This law only applies to separations occurring on or after January 1, 1984. Relationships that ended prior to this date are not subject to division under this law.

Will this law apply if a divorce or separation takes place after one or both spouses or common-law partners are retired?

Yes. Pension payments are considered to be a family asset and are therefore subject to this 50/50 split.

Opting-Out of the 50/50 Credit Split

Effective June 24, 1992, amendments were made to the Act that allow for spouses or common-law partners to opt out of the mandatory credit splitting, provided they meet certain requirements.

If both parties agree, mandatory splitting of pension credits need not occur, provided each person carries out the following:

1. Receives independent legal advice.
2. Receives a statement from the pension plan administrator, indicating the pension benefit credit to which each spouse or common-law partner would be entitled if the division were to take place.
3. Enters into the required written agreement with their spouse or partner, the (Pension Benefit Spousal/Common-law Partners Agreement) copies available from your administrator or the Manitoba Pension Commission.

Who can use the Opt Out provision?

The opt out provision is available to spouses or common-law partners who separated on or after June 24, 1992, or to those who had separated earlier, but had not finalized the division of pension credits or payments.

What if only one of the two parties wants to opt-out?

Where the parties can not obtain mutual agreement, the mandatory splitting of pension benefits must be applied (50/50).

Splitting the Difference

If both parties are members of pension plans they can agree in writing to divide equally, the difference in values of the two pensions, rather than dividing both pensions on a 50/50 basis.

Example: transfer one-half of the net difference in the two benefits, or in this case;

Division of Net Difference

($70,000-$40,000)/2 = $15,000 *

Mrs. X= $70,000 - $15,000 = $55,000

Mr. X = $40,000 + $15,000 = $55,000

* This amount is transferred from Mrs. X's plan to Mr. X's plan, thereby equalizing the pension benefit credits earned during the marriage or common-law relationship.

Common-Law Relationship

How is a common-law partner defined under the Act?

A "common-law partner" of a member or former member is:

1. a person who, with the member or former member, registered a common-law relationship under section 13.1 of The Vital Statistics Act, or
2. a person who, not being married to the member or former member, cohabited with him or her in a conjugal relationship

1. for a period of at least three years, if either of them is married, or
2. for a period of at least one year, if neither of them is married;

How is entitlement to a division of credits for a common-law partner established?

Entitlement under The Pension Benefits Act is dependent upon the parties' ability to establish the existence of the relationship to the satisfaction of the plan administrator or provide proof to the administrator of its registration under The Vital Statistics Act, as applicable.

What are the requirements to trigger a division of assets?

Pension benefit credits or payments due, are subject to an equal division under The Pension Benefits Act where either:

1. an order of the Court of Queen's Bench made under The Family Property Act (formerly The Marital Property Act) exists requiring that family assets of the spouses or common-law partners are to be divided; or
2. a written agreement between spouses or partners exists dividing family assets of the spouses or common-law partners between them.

For purposes of clause (a) it should be noted that only:

•  married spouses;
•  parties to a registered common-law relationship; or
•  parties to a non registered common-law relationship who have cohabited in a conjugal relationship for a period of at least three years

can obtain an order to divide family property under The Family Property Act. Otherwise, benefits and payments are divisible on the existence of a written agreement dividing family property.