Page 118 - A Canuck's Guide to Financial Literacy 2020

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They can assign 80% of their pensions. (20 years married or cohabitation divided by 25
years of contribution). Their new pensions would be calculated as:

Jorge's monthly CPP pension will consist of two parts

• Assignable Portion
o ($700 * 80% = $560) = $560 is the amount that can be assigned.
• Unassignable Portion
o ($700 - $560 = $140) = $140 is the amount that cannot be assigned.

Natalie's monthly CPP pension will consist of two parts

• Assignable Portion
o ($350 * 0.80 = $280) = $280 is the amount that can be assigned
• Unassignable Portion
o ($350 - $280 = $70) = $70 is the amount that cannot be assigned

The total assignable CPP is $560 + $280 = $840. That amount would be split equally with
half being paid to the spouse. The assigned portion would be $840 divided by 2 = $420.
($840 / 2 = $420)

New Pension Amount - Jorge & Natalie
Jorge's new monthly pension after assignment is $420+$140= $560.(Jorge's assignable
portion + non assignable portion)

Natalie's new monthly pension after assignment is $420 + $70 = $490. (Natalie's assignable
portion + non assignable portion)

As you can see, through CPP pension splitting, you have effectively transferred income
from a higher tax bracket (Jorge) to a lower tax bracket (Natalie).

CPP Credit Splitting

The subject of credit splitting usually comes up when couples are going through a
separation or divorce. The CPP contributions you and your spouse or common-law partner
made during the time you lived together are known as CPP pension credits. When a
relationship ends, the credits can be split equally between the couples. This is called credit
splitting.

• Credits can be split even if one spouse or common-law partner did not pay into the
CPP.
• Usually credits of one spouse is increased while the other is decreased.
• CPP credits are equalized for the period of cohabitation

Credit splitting is mandatory upon divorce in most provinces even with a written
separation agreement. The provinces of British Columbia, Saskatchewan and Quebec allow
former spouses to opt out.