Delean: What happens to pensions when couples split?

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In Quebec, pension entitlements accumulated during a marriage are a shared asset, and divisible unless both parties consent to a different arrangement.

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What happens to pensions when couples split and when will Canadian seniors get their Old Age Security (OAS) raise? These were among the latest reader questions.

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Q: How does divorce affect pensions? Is it split evenly? Can the partners decide not to split it and keep what they have?

A: In Quebec, pension entitlements accumulated during a marriage are a shared asset, and divisible in the event of divorce unless both parties consent to a different arrangement. That applies to Quebec Pension Plan and Registered Retirement Savings Plans (RRSPs) as well as private pensions. Common-law partners can share if they want to when the relationship ends, but are not legally obligated to do so.

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Q: My spouse received a letter from Service Canada recently stating she was overpaid the GIS (Guaranteed Income Supplement) for 2018 to 2021. It amounts to thousands of dollars. The reason given was “a correction to your spouse’s income for the years 2017 through 2020.” 

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She started receiving Old Age Security in 2018. I postponed it and have only just applied for it since I was still receiving an income and would have been subject to clawback (of OAS). My application appears to have triggered a review of our family income.

What we do not understand is it went on four years without us knowing. What recourse do we have?”

A: Unless they’re charging her interest, probably not much. GIS is for low-income seniors and your conjugal status and combined yearly income does figure in the amount you’re entitled to receive (if any). The fact it wasn’t flagged earlier might have something to do with Service Canada’s heavy workload during the pandemic. It isn’t uncommon for benefits to get re-examined periodically, and repayment requested, but she shouldn’t have to pay any penalties or interest on an error that should have been detected earlier and was not her doing.

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Q: When does the Old Age Security increase take effect?

A: If you mean the 10-per-cent increase in the monthly OAS cheque for seniors 75 and older, that’s supposed to happen in July. All OAS recipients will get a one-per-cent increase this month; that’s the quarterly adjustment for cost of living, higher than usual because of the recent inflationary spike. That raises the monthly maximum to $648.67 for those who started collecting OAS at age 65.

Q: I receive two types of income from U.S. stocks: dividends and capital gains. For income-tax purposes, I normally use the average exchange rate for the year to report my dividend income in Canadian dollars. For capital gains, I use the exchange rate on my broker’s website immediately after an order is executed. Am I doing this right?

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A: Canadian tax rules accept both conversion methods. You have the option of using the one that’s most advantageous for your transactions in any given year.

The Montreal Gazette invites reader questions on tax, investment and personal finance matters. If you have a query you’d like addressed, please send it by email to Paul Delean at [email protected]

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