Ask Fred — Answers

Topic: Pension Income Splitting

I looked at your site and found it very useful. I have a question which I hope you can answer. I am elegible to retire in 2009. I will receive an annual pension in the order of approximately $90,000. My wife an I are currently both 51 years old and reside in Ontario. My wife has not worked since 1985 and does not receive any pension or other income. Neither of us has any RRSPs or other retirement income. Would we be eligible for the income splitting you describe on your site? Also, would we would be able to split the pension income attributing 50% of the total annual income to each of us and thereby take advantage of the significant tax reduction? Thank You

Answer:

Thank you for your inquiry.
 
Assuming the pension you expect to receive is to come from life annuity payments out of or under a pension plan, with the exceptions noted below, you will be able to split up to 50% of your pension with your spouse in 2009.
 
The exclusions are:
 
- amounts from certain unfunded plans or unfunded supplemental employee retirement plans.
 
- payments from most supplemental pension plans including:
           a) Salary Deferral Arrangements(SDA's) or
           b) Retirement Compensation Arrangements(RCA's) or
           c) plans that would have been SDA's or RCA's, had they beenfunded.
 
Before splitting your pension income in 2009, we suggest you confirm with the pension issuer that your pension payments do not include any of these exceptions.