Pension Update – Change to the Law
The Canadian law relating to pensions can be mystifying at the best of times. However, there have been some relatively recent changes to pension law that aim to simply things.
As of January 1, 2012, there have been amendments to both the Ontario Family Law Act and to the Ontario Pension Benefits Act which are intended to make it easier for married couples to value and divide their pension assets in the event that the relationship ends.
Although the technical aspects of the legislative are complex, for the average separating couple the bottom line is this: Effective January 1, 2012, a spouse who is a member of a pension plan and who is obliged to pay his or her former spouse a settlement based on pension value, will now be able to make some or all of the required payment directly from the pension plan itself.
For married Ontario partners, one of whom is a member of an Ontario pension plan, the change applies if the partners separated on or after January 1, 2012. The change can also apply if these partners if they separated before January 1, 2012 but had not resolved their property settlement by that date. Unmarried spouses may also benefit from these changes if they agree to share the value of the pension plan after separation.
In either case, the legislative amendments also give rise to additional administrative changes: These require the pension plan administrator to take responsibility for valuing the pension so that divorcing spouses do not have to hire an actuary to perform this task for them. The affected spouses must submit a specified form to the pension plan administrator in order to obtain the necessary pension valuation; the specified forms can be found on the Financial Services Commission of Ontario website.