Pension Income Splitting

This Income Tax Act provision allows retired couples to reduce their overall taxes. 

A retiree can allocate up to half of their pension income to their lower-income spouse or partner when filing a tax return. This feature is designed to drop the higher-income spouse or partner into a lower tax bracket.  

Information and application forms are at the Canada Revenue Agency (CRA) website.

OMERS and income splitting

Your OMERS Plan pension is eligible for pension income splitting.

Retirement compensation arrangement (RCA) benefits – The RCA benefit is eligible for income splitting after age 65 (subject to limits). Before age 65, the RCA benefit is not eligible for income splitting. The RCA is a separate fund that pays benefits over and above the maximum pension that the OMERS Plan is permitted to pay according to the Income Tax Act

Setting up pension income splitting

Pension income splitting is set up through Canada Revenue Agency (CRA), not through OMERS. 

The retired member and the spouse or partner must complete a Form T1032, Joint Election to Split Pension Income.

There is a line on the income tax return for the retired member to deduct the pension amount allocated to their spouse, and one for the spouse to report the allocated pension amount.