Dividing assets in a divorce usually involves spouses making checklists and then working through the details. You would think that little is missed by most couples, but one important item is being missed by 85 percent of Canadians in their divorces.
The surprising missed item came to light in a recent study by Dorothy Easton, a graduate of Simon Fraser University’s masters of public policy program.On average, pensionable earnings are more than doubled for women. Easton found that Canada Pension Plan receives only 9,000 applications for CPP credit splitting from an estimated 600,000 divorcing couples each year.
CPP credits accrued during a marriage are recognized as a marital asset. They are automatically divided equally when the CPP is notified of a separation or divorce, but only one in seven divorcing couples divide their CPP credits.
The policy objective of dividing the credits equally at divorce is gender equality, recognizing that earnings inequalities often exist in a marriage and extend into divorce. The majority of applications for CPP credit-splitting are made by women, and on average their shares of pensionable earnings are more than doubled by the equalization. This is clearly important, because the statistics show that divorced women are more likely to experience poverty in retirement than either their married counterparts or those who never married.