Division of Pensions on Marriage Breakdown: New Rules

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Explore:  Divorce Pensions

[author: Mary Picard]

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.