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Pension Benefits Divided on Separation Cannot be Assigned to Estate

The equalization or division of pension benefits on separation under the Family Law Act is governed by the Pension Benefits Act (“PBA”).

As such, attempts by the separated parties to negotiate a settlement of the pension division outside of the PBA scheme is unlawful and will not be upheld by a Court. Perhaps more importantly from a professional responsibility standpoint, such an arrangement in a negotiated separation agreement will not be be implemented by the applicable pension plan administrator.

This was highlighted in a recently reported decision of the Superior Court (Meloche v. Meloche, 2019 ONSC 6143).  In Meloche the parties were married for thirty years. The wife was a teacher who retired on June 30, 2015. Upon retirement the wife elected to begin to receive her pension.  The parties separated in July 2017. The husband suffers from ALS and resides in a long term care facility.

Under the family law pension division system the husband is entitled to receive 48.99 per cent of the wife’s monthly pension payments. There was no dispute between the parties on that issue.

However, given the husband’s reduced life expectancy, he wanted the 48.99 per cent directed to his estate in the event that he predeceased his wife and sought an Order from the Court to that effect.

In rejecting the request in short order, Justice Munroe confirmed the applicable provisions of the PBA and concluded that “Pensions simply are not like other assets; they are unique. Pensions have their own separate regime found in the PBA.”

A “survivor and joint pension” is designed to provide protection for the non-member spouse in the event of the death of the plan member. That benefit cannot be eliminated by the subsequent marriage of the plan member.    However, there is nothing in the Act that suggests that the benefit can be gifted or bequethed nor paid to the estate of the spouse.

This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

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