Division of Pensions on Marriage Breakdown: New Rules

Significant changes came into effect on January 1, 2012, regarding the treatment of pension benefits of Ontario members who go through a breakdown of their spousal relationships. The new regime is a big improvement over the old regime. There are now detailed, clear rules as to exactly what has to happen when a plan member’s former spouse wants to receive the value of the pension he or she is entitled to.

Plan sponsors should consider whether they need to amend their pension plan texts to comply with the new regime in Ontario. The significant features of the new rules are:

  • the non-member former spouse can get a lump sum payout from the pension plan, even if the employee is continuing to accrue a pension;
  • the plan administrator is required by law to calculate the value of the non-member former spouse’s entitlement, in accordance with formulas set out in new regulations under Ontario pension law; and
  • specific request forms must be used by the plan member and former spouse, in order to request that the plan administrator calculate the value of the former spouse’s entitlement.
Mary Picard

About Mary Picard

Mary Picard practices employee pensions and benefits law as a partner in the employment and labour law group in Dentons’ Toronto office. Mary has advised clients on the administration of Canadian pension plans and employee benefits for more than 30 years. She has been consulted by federal and provincial governments for policy advice on changes to pension law. She has assisted large and small employers, in both the private and public sectors, in their dealings with various players in the pension arena including pension regulators, unions, consulting firms, trustees, actuaries and auditors. Mary has extensive experience with difficult pension and employee benefit issues in insolvencies, restructurings, financings, and corporate transactions. She teaches pension courses at Humber College.

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