Pensions often form one of the largest portions of the net family property. Accordingly, it is crucial to retain a family lawyer with a comprehensive understanding of how to manage the division of a pension following the breakdown of a relationship.
As part of the equalization of the net family property after a separation or divorce, all family property held by the parties must be valued and divided. Pensions fall within the definition of family property under the Ontario Family Law Act, and therefore, the value of any pension held by either party must also be equalized. The provincial government has provided direction as to how to value Ontario regulated defined benefit pensions. Pensions regulated in other provinces, federally or internationally, need to be valued on the same basis, to the extent possible. Defined contribution pensions and senior executive retirement allowances may be valued on a different basis.
At Boulby Weinberg LLP in Toronto, our family law lawyers have extensive experience working with clients with complex pension plans. We are familiar with the various valuation schemes for the different types of pension plans and will work to secure your interest in the division of any pension income following the breakdown of your relationship.
The first consideration is the type of pension(s) that will be split. The method for valuing the pension will vary depending on what kind of pension it is. Generally, there are three main types:
Defined Contribution Pension Plan (DCPP): A defined contribution plan is a private plan in which an employee contributes a defined percentage of their pay to their pension. This amount is often matched or subsidized by contributions from the employer. The retirement income resulting from a defined contribution plan will vary depending on the value at the date of retirement.
Defined Benefit Pension Plan (DBPP): This type of private plan guarantees the holder of the pension a certain income upon retirement, calculated based on salary and years of service.
Canada Pension Plan: This is a public plan to which most workers in Canada contribute. The plan will provide contributors with a (generally modest) income after retirement and entitle them to disability benefits should they become unable to work prior to retirement age.
When a couple separates prior to retirement age, the value of a pension is dynamic, reliant on future earnings, which is why the valuation of a pension can become complicated.
Canada Pension Plan contributions are viewed as ‘credits’. The number of credits accumulated by one or both parties during the course of the relationship can be apportioned between each person upon request. In order to qualify for CPP credit-splitting, a couple must have cohabitated for at least one year prior to the end of the relationship.
DCPPs will be assessed based on their value at the date of marriage and date of separation. This is the value that will then be equalized among the parties.
DBPPs are more complex and require a complicated formula factoring in the following:
No matter the type of pension(s) held by you and your former spouse or partner, Boulby Weinberg LLP can guide you through the process of equalizing its value. We are experienced with all types of pension plans, from simple to complex. We will work to ensure the value of your pension is divided fairly while maximizing your interest.
To arrange a consultation with a reputable and empathetic lawyer at Boulby Weinberg LLP, please complete our confidential online questionnaire, which will provide you with valuable preliminary information tailored to your situation. A representative from our firm will contact you within one business day to discuss your matter further and arrange an initial meeting. To contact our firm without completing the questionnaire, please reach out to us online, or call us at 647-494-0113 ext. 102.