The Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) allow a couple to balance out their pension amounts, to a degree. A portion of the higher-income spouse’s CPP/QPP benefits are shifted to the lower-income spouse’s pension.
Known as “pension sharing,” it’s most effective when a couple has lived together for a long time. The government uses that period to determine the number of pension dollars that can be shared. Here’s an example of a couple who lived together during all the years they contributed to the CPP or QPP. Originally, Elyse received a $900 monthly benefit, and her spouse, Robert, received a monthly benefit of $300. With pension sharing, $1,200 is equally split, so each spouse receives a $600 monthly benefit. They now save tax as a couple by having less pension income taxed at a higher rate and more taxed at a lower rate.