Pension Division Upon Relationship Breakdown

Instructions for Lawyers

Important Notice:

Beginning January 1, 2020, common-law partners are permitted to submit Family Property Orders for the division and distribution of Management Employees Pension Plan, Supplementary Retirement Plan (SRP) for Public Service Managers, Public Service Management (Closed Membership) Pension Plan (PSM(CM)PP), and Provincial Judges and Masters in Chambers Registered and Unregistered Pension Plans (Judges Pension Plan) pension benefits upon relationship breakdown.

In order for common-law partners to be eligible for a division and distribution of pension benefits upon relationship breakdown, the below definition of pension partner must have been met:

A pension partner is a person who, at the relevant time, is:

  1. someone to whom you are married and from whom you have not been living separate and apart for three or more consecutive years; or
  2. if no such person exists, someone with whom you have been living in a common-law type relationship:
    1. for a continuous period of no less than three years, or
    2. of some permanence, if there is a child of the relationship by birth or adoption.

The definition of pension partner in PSM(CM)PP is:

"pension partner" means

  1. a person who, at the relevant time, was married to a participant or former participant and
    1. was not judicially or otherwise separated from him, or
    2. if so separated, was wholly or substantially dependent on him,
  2. if there is no person to whom subclause (i) applies, a person who
    1. lived with the participant or former participant
      1. for the 5-year period immediately preceding the relevant time, or
      2. for the 2-year period immediately preceding the relevant time if there is a child born to that person and the participant or former participant, and
    2. was, during that period held out by the participant or former participant in the community in which they lived as his consort, or
  3. if there is no person to whom subclause (i) or (ii) applies, a person who was married to but separated from the participant or former participant and not dependent on him at the relevant time.

The definition of pension partner in the Judges Pension Plan is:

"pension partner" means

  1. a person who, at the relevant time, was married to a participant or former participant and
    1. was not judicially or otherwise separated from him or her, or
    2. if so separated, was wholly or substantially dependent on him or her,
  2. if there is no person to whom subclause (i) applies, a person who, as at and up to the relevant time, had lived with the participant or former participant in a conjugal relationship
    1. for a continuous period of at least 3 years, or
    2. of some permanence, if there is a child of the relationship by birth or adoption,
    and was, during that period or that relationship, as the case may be, held out by the participant or former participant in the community in which they lived as being in that conjugal relationship, or
  3. if there is no person to whom subclause (i) or (ii) applies, a person who was married to but separated from the participant or former participant and not wholly or substantially dependent on him or her at the relevant time.

(A) What is Available for Division

The non-plan-member spouse is entitled to a portion (the "non-plan member spouse's share") of the plan member's pension benefit ("Total Entitlement").
  1. If a plan member is not vested 1 at the end date of the period of joint accrual, the Total Entitlement equals the plan member's contributions, with interest, to the pension plan.

  2. If a plan member is vested at the end date of the period of joint accrual, and there is to be an immediate division, the Total Entitlement is calculated as the present value of the plan member's pension, as if the plan member terminated from the pension plan at the end of the period of joint accrual with the spouse and commenced receiving his/her pension at "pensionable age" (age 65 for the Local Authorities and Public Service plan members, age 60 for Management Employees and SRP for Public Service Managers plan members, and age 55 for Special Forces and Closed Management plan members) ("Pensionable Age") 2.

    Please note: The above-noted calculation of the Total Entitlement does not necessarily equal the value of the pension to the plan member. Certain benefits, such as the value of early retirement enhancements, are not captured in the Total Entitlement. Plan members, their ex spouses, and their lawyers are encouraged to consult with an actuary if they wish to establish the value to the plan member of that person's PSPPA pension plan benefits.

  3. If a plan member is vested at the end date of the period of joint accrual, and there is to be a delayed division, the Total Entitlement is:

    1. where a plan member commences a pension, the commuted value of the pension; or
    2. where the plan member takes a termination payment, dies, or transfers their pension benefits to another plan, the actual amount paid or transferred to or on the plan member's behalf.

  4. If a plan member is receiving a pension (or pension advances) on the date the order is filed the Total Entitlement is the monthly pension payment payable to the plan member.

In order to obtain an estimate of the portion of a Total Entitlement that pertains to the period of Joint Accrual, and is therefore available for division between the parties, the Total Entitlement must be multiplied by the years of the period of joint accrual over the total years of pensionable service to the division date. This results in the "Total Pre-Division Benefit". The spouse is entitled to a maximum of 50% of the Total Pre-Division Benefit.

(B) What Benefits are Available to the Non-Plan-Member
Spouse? 

3

The options available to the non-plan-member spouse fall into the following four categories, all of which revolve around the plan member's status and the plan member's proximity to pensionable age. Both the date of determination of the plan member's vested status and the plan member's proximity to pensionable age are the end date of the period of joint accrual. The end date must be set out in the order and generally will be the end of cohabitation or marriage.

  1. Non-Vested Members
    The non plan member spouse is entitled:
    1. to receive an immediate taxable cash payment from the pension plan; or
    2. to have that amount immediately transferred to an RRSP.
  2. Vested Members Not Within 10 Years of Pensionable Age4
    If the plan member is vested in the pension plan and is not within 10 years of Pensionable Age, the non-plan-member spouse must have his/her share transferred immediately to a LIRA (in his/her name).
  3. Vested Members Within 10 Years of Pensionable Age4
    If the plan member is vested in the pension plan and is within 10 years of Pensionable Age, the non-plan-member spouse can:
    1. have his/her share transferred immediately to a LIRA; or
    2. have his/her share of the pension benefit calculated and transferred to a LIRA (in his/her name) at the time of the plan member's termination, transfer to another pension plan, retirement, or death.
  4. If the Plan Member is Already Receiving a Pension
    The non-plan-member spouse is entitled to receive a percentage of the monthly pension payment payable to the plan member (up to 50% of the value accrued during the period of joint accrual).

(C) How is the Total Entitlement Divided?

The regulations require that the following calculation be used to divide pension benefits:
Total Entitlement x Period of Joint Accrual (years + fraction of year) = Total Pre-division Benefit
Total Accrual Period (years + fraction of year)

The "Period of Joint Accrual" is generally made up of the years the plan member and the non-plan-member spouse were married or together 5 - while the plan member was a member of the plan - and it includes any optional service paid for by the plan member during that same period of time 6.

The "Total Accrual Period" is the total number of years credited to the plan member in the pension plan and it includes any optional service that has been purchased. It is important to remember, however, that the end date for the Total Accrual Period depends on the nature of the benefit to which the non-plan member spouse is entitled:

  • if the non-plan-member spouse is eligible to and elects to have a lump sum transferred to his or her LIRA at the time of the plan member's termination, retirement, death, or transfer to another pension plan ("Event"), the Total Accrual Period will include all of the plan member's service until the date of Event, including purchased optional service;
  • if a lump sum payment is to be made to the non-plan-member spouse immediately, the Total Accrual Period is all of the plan member's service up to the end of the period of joint accrual, including optional service purchased prior to that date.

Once the above calculation is complete, the "Total Pre-Division Benefit" is multiplied by the "Division Factor". The Division Factor is a fraction representing the percentage of the total pre-division benefit to which the non-plan-member spouse is entitled (for example, 50%).

(D) What happens to the plan member's pension after the non-plan-member spouse receives his or her share?

Where the non-plan-member spouse has chosen to take an immediate transfer of his or her entitlement to a LIRA (and, as a consequence, not chosen or been eligible, as the case may be, to take a delayed payout at termination, retirement or death, or receive a portion of the pension in pay), the plan member's pension is recalculated on an actuarial basis to account for the payment of a portion of the value of the pension to the non-plan-member spouse.

In particular, APS will calculate what the non-plan-member spouse's share of the plan member's pension would be if it were a monthly pension benefit (the "Benefit Offset").

On annual Plan Member Statements, in pension estimates prepared for the plan member, and when the plan member takes his or her pension, APS will state the result of:

  • calculating the plan member's monthly pension benefit without any reduction to account for the payment to the non-plan-member spouse (the "Unreduced Pension"); and
  • then subtracting the Benefit Offset from the Unreduced Pension.

    Example:
    The non-plan-member spouse receives $100,000 as a share of the plan member's pension. This amount is transferred immediately by APS to the non-plan-member spouse's LIRA. APS determines that the payment made to the non plan member spouse would equal a monthly pension benefit of $400 7. This becomes the Benefit Offset amount. The plan member decides to retire. APS calculates his unreduced monthly pension benefit to be $2,500. Applying the Benefit Offset, the plan member is entitled to a monthly pension benefit of $2,100.

    Please note: This is a simplified example and the numbers contained in this example are arbitrary and do not reflect actual pension values.

If the non-plan-member spouse is eligible to choose, and chooses, to delay the transfer of her entitlement to her LIRA to the date the plan member takes his/her benefit after his/her termination, transfer, retirement, or death, the plan member's annual member statement will simply state that the benefit payable to the plan member will, in the future, be reduced pursuant to the FPO.

III. Requirements of Requests for Pension Information

Under the regulations, we are required to provide pertinent pension related information to both the member and the non-member spouse upon request of either.

(A) The Information We Require

In order to provide any information, APS must first have a written request from either party, including:
  1. that party's signature;
  2. the full names (including middle name), addresses, and telephone numbers for both the plan member and the non-plan-member spouse, or the contact information of their respective lawyers;
  3. an estimated date for the period of joint of accrual; and
  4. if either the plan member or the non-plan-member spouse would like APS to provide the information to his or her lawyer, we will require written authorization from him or her, allowing us to provide the information to his or her lawyer (as the case may be).

(B) The Information We Provide

Under the regulations, we are required to provide the requested pension information to both the member and the non-member spouse upon request of either. Therefore, upon receipt of a complete written request, APS will provide both parties with a statement containing:
  1. an estimate of Total Entitlement calculated as of the date of request or an earlier date if specified in the request;
  2. the date the plan member became a participant in the pension plan;
  3. the amount of pensionable service accumulated up to the date of request;
  4. if the written request indicates the period of joint accrual , the amount of pensionable service accumulated during that period;
  5. the plan member's service, salary and contributions information; and
  6. if applicable, the date the plan member terminated from the pension plan
APS will provide this statement upon request but it is not required to provide it more frequently than once per calendar year.

After the division of the plan member's pension, APS will provide the plan member with a statement:
  1. advising of the date when the non-plan-member spouse's share of the plan member's pension was transferred from the pension plan to the non plan member spouse; and
  2. a summary of the adjusted pension benefits.

IV. How to Initiate a Division and Distribution of Pension Benefits

To initiate division and distribution of pension benefits, a Family Property Order must be filed with the pension plan administrator. The FPO must set out:
  • the name of the pension plan or plans to be divided;
  • the beginning and end of the period that pension benefits are considered to have jointly accrued;
  • the "division factor", which is the percentage share of the jointly accrued benefit which is awarded to the non-member spouse/common-law partner. This percentage must not exceed 50%;
  • where the non-member spouse/common-law partner is eligible, whether or not a delayed division has been chosen.

The onus is on the non-plan-member spouse to ensure:

  • APS is aware of action being taken to file an FPO;
  • APS has received a court certified copy of the FPO when completed;
  • APS is kept informed of any changes in contact information, particularly for delayed division FPOs, until the finds are disbursed

If you require information please contact APS.

Notes:

1 The term "vested" means that the plan member has at least 2 years of membership in the pension plan, except the MEPP, the Supplementary Retirement Plan (SRP) for Public Service Managers and the SFPP, which require 5 years of membership before the plan member is vested.

2 If pensionable age has already been reached, the date that will be used in calculating the Total Entitlement will be a date specifically mentioned in the order or, if no date is mentioned in the order, the date following the day on which the order is made.

3 Please note: the term "non-plan-member spouse" is used to refer to the spouse of the plan member in question. This term is not meant to reflect whether or not that spouse is or is not a member, in his or her own right, of the same (or other PPSPA) plan.

4 Please note however, that the Plan's usual "small pension" rules still apply. Therefore, if the amount in question is below the prescribed minimum, it may be possible to transfer the funds to an unlocked vehicle. Please call us for estimates as to whether or not this may occur in your particular case.

5 The order itself will state what the Period of Joint Accrual is. The period of joint accrual is normally the period in which the couple was married and/or living together. This means that for married couples, that period may be greater or less than the actual period of marriage.

6 The Period of Joint Accrual will also include any service transferred into the pension plan from another pension plan that relates to service performed during the Period of Joint Accrual.

7 The amount of the Benefit Offset will be adjusted upward to reflect cost of living allowance increases for deferred pensions or downward to reflect the consequences of the plan member choosing to take early retirement.