What Happens to an OMERS Pension After Divorce?

An OMERS pension can be an important asset when a marriage or spousal relationship ends, but divorce does not automatically mean your former spouse receives half of your entire pension. After separation or divorce, the OMERS pension earned during the spousal relationship may be valued for family-property purposes. The pension does not have to be divided directly. If the spouses decide to use it for an equalization payment, OMERS can transfer or divide the permitted amount under Ontario pension and family law rules.

How an OMERS Pension Is Valued After Separation

The relevant figure is the Family Law Value (FLV), which represents the value of the pension accrued during the spousal relationship. It is not simply the total contributions made by you and your employer or the monthly pension you expect to receive.

OMERS calculates the value using your contributory earnings, credited service at the family law valuation date, the terms of the plan and assumptions required by Ontario law. Understanding how an OMERS pension is calculated can help distinguish your projected retirement income from the separate valuation performed for a relationship breakdown.

The process begins with an Application for Family Law Value. A married member or the member’s legally married former spouse can apply. For a common-law relationship, only the OMERS member can apply for the statement. The completed application is sent to OMERS, which normally provides the statement within 60 days after receiving all required information.

The OMERS separation and divorce process explains the application requirements and documents needed for the valuation.

Does Your Former Spouse Automatically Get Half of Your OMERS Pension?

A pension division is not automatic. The FLV establishes the value available for family-law purposes, after which the spouses determine how the overall property settlement will be handled.

For spouses who decide to divide the OMERS pension itself, OMERS cannot administer a payment to the former spouse exceeding 50% of the FLV shown on the statement. That is a maximum, not an automatic entitlement to 50%. The separation agreement, court order, family arbitration award or other applicable settlement documentation determines the amount or percentage to be transferred or divided.

Ontario’s broader treatment of pensions during marriage breakdown is explained in the FSRA guide to pensions and marriage breakdown. The pension value forms part of the property calculations when Ontario’s family-property rules apply, so spouses may settle their obligations using the pension, other assets or an appropriate combination rather than necessarily splitting the pension itself.

What Happens If You Are Still Working or Have a Deferred OMERS Pension?

When an active or deferred member uses part of the pension to satisfy the settlement, the former spouse applies to have the specified amount transferred from OMERS. The separation or divorce documentation must identify the amount or percentage of the FLV being transferred and use the same family law valuation date as the OMERS statement.

For an active member with a defined benefit pension, the reduction to the member’s future pension is applied when the member later retires or terminates employment. A deferred member’s pension is reduced following the transfer.

Someone who has already left an OMERS employer but kept the pension in the plan can review how that benefit otherwise operates under the rules for an OMERS deferred pension.

What If You Are Already Receiving Your OMERS Pension?

A pension already in pay can also be divided. Instead of transferring a lump sum from an unstarted pension, OMERS pays the former spouse their specified share of the retired member’s pension directly and reduces the member’s payment accordingly.

The settlement can also involve arrears dating from the family law valuation date to the month OMERS implements the division. Unless the applicable separation or divorce document excludes arrears in a manner OMERS can administer, Ontario pension rules require OMERS to include them. Those arrears are not paid to the former spouse as one lump sum. They are incorporated into the division of future pension payments over the remaining lifetime of the retired member.

This makes the wording of the settlement documentation particularly important for someone who has already retired. A pension division implemented years after separation can affect the monthly payment differently from one completed promptly.

Does Divorce Affect OMERS Survivor Benefits?

Separation can change who qualifies for OMERS survivor benefits, so pension division and survivor rights should not be treated as the same issue.

A former spouse may retain particular survivor rights depending on the member’s retirement status, the timing of the relationship breakdown and whether any applicable rights have been waived. For a retired member whose pension has not yet been divided, OMERS provides a specific post-retirement waiver process when an eligible former spouse wishes to waive survivor pension rights.

Beneficiary information should also be reviewed after a relationship ends. The effect of death on the pension is covered separately under OMERS pension death benefits, while the family-law consequences of separation remain governed by the pension and settlement rules applicable to the former spouses.

Questions About OMERS Pensions and Divorce

Does the OMERS Family Law Value include an AVC account?

No. An OMERS Additional Voluntary Contributions account is not included in the FLV of the defined benefit pension. If the AVC balance is relevant to the property settlement, it must be addressed separately.

Is an OMERS Retirement Compensation Arrangement included in the FLV?

The Retirement Compensation Arrangement (RCA) is also excluded. OMERS can provide an RCA pension estimate, but an independent valuation may be needed if the spouses want its value considered in their settlement because OMERS cannot divide the RCA at source between former spouses.

What happens if both spouses have OMERS pensions?

Each membership is valued separately. If both spouses are OMERS members, each can obtain a Statement of Family Law Value for their own membership, and those pension assets can then be considered as part of the overall property calculations.

Is the Family Law Value an after-tax amount?

No. The FLV shown by the pension administrator is a gross amount and is not reduced to account for future income tax. Determining an appropriate tax adjustment when negotiating the property settlement is separate from OMERS calculating the statutory pension value.