Division and Payment

This section provides specific details pertaining to the calculation and payment of the amount resulting from the division of pension benefits.

The plan member's accumulated pension benefits are subject to division before or after retirement. For the member who is in receipt of monthly pension payments, the maximum transferable amount is based on the value of future pension payments only.

Calculation of the Division of Pension Benefits Amount

Depending on the terms of the Court Order or written Agreement, the recipient can receive up to 50 percent of the actuarial present value of the plan member's pension benefits accumulated during the period subject to division. The actuarial present value is a lump sum equivalent to a pension benefit normally payable in the future. If the Court Order or written Agreement provides for the transfer of a smaller lump sum amount, this smaller amount will apply.

Payment of the Pension Benefits Division Amount

Locked-in provisions

The division payment is transferred as a lump sum directly to a locked-in registered retirement vehicle chosen by the recipient. The recipient can also choose to have the funds transferred to a life income fund, to another registered pension plan or to a financial institution or life insurance company for the purchase of an immediate or deferred life annuity. The division payment can be transferred into several accounts, as long as they are locked-in registered retirement vehicles. Recipients are responsible for consulting with their chosen institution as to their financial options.

Required Forms

• PWGSC-TPGSC 2347-18 titled "Certification of Lock-in for Purposes of the Public Service Superannuation Act or the Pension Benefits Division Act". The chosen financial institution has to complete this form to certify that the division payment will be administered in accordance with the locked-in provisions of the PBDA.
• T2151 E titled "Direct Transfer of a Single Amount Under Subsection 147(19) or Section 147.3". This form is required by the Canada Revenue Agency (CRA) to verify that the funds are transferred to a Registered Retirement Savings Plan (RRSP). It is available through your financial institution or on the CRA Website.

If, the recipient of the division payment is also a plan member under the Public Service Superannuation Act (PSSA), the division payment can be used as payment towards an ongoing purchase of prior pensionable service. (For additional information on prior pensionable service buyback, consult the Service Buyback Package).

The division payment can also be used to repay deficiencies in contributions for periods of leave without pay.

Tax Implications

As the division payment is transferred into a locked-in registered retirement vehicle, taxes do not apply until the recipient starts receiving periodic benefits from the chosen financial institution. However, if any portion of the division payment exceeds the limits allowed under the Income Tax Act, it is paid directly to the recipient and income tax is withheld at source. For additional details on income tax, we invite you to consult the CRA Website.

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