Pension Division and the FLA CBA - Joint Session - Family Law and Pension & Benefits February 7th, 2013 - Vancouver Thomas G. Anderson, Q.C. Anderson Pension.

Pension Division and the FLA

CBA - Joint Session - Family Law and Pension & Benefits

February 7th, 2013 - Vancouver

Thomas G. Anderson, Q.C.

Anderson Pension Law Consulting

http://andersonpensionlaw.shawwebspace.ca

What’s new under the FLA

Much will feel familiar Some things that stayed the same:

– FRA - division of family assets under Part 5– FLA - Part 5

– FRA - pension division rules - Part 6– FLA - Part 6

Different definition of “spouse”

FRA - married spouse, s. 120.1 agreement, unjust enrichment

FLA – married spouse or 2 year marriage-like relationship– married - “spouse” for up to 2 years after divorce– marriage-like relationship - 2 years after separation

Family Property Basics

FRA - crystallizes on triggering event FLA - “crystallizes”? if so, on separation

FRA - property owned before marriage can be family asset

FLA - property owned before marriage “excluded property”

Portion of Benefits Subject to Division

FRA - marriage to triggering event FLA - date marriage-like relationship commenced

to date of separation

FRA - if no dates: default rules apply FLA - if no dates: administrator can't divide the

benefits

FRA - FLA - concepts retained

Local Plan Limited Member DC account DB provision Hybrid plan

Information from administrator

FRA - Form 1 FLA - Form P1

provide requested information admin must give 30 day’s advance notice mail, e-mail, fax Member’s personal information can’t be disclosed

DC Account

Form P3, agreement/order, admin. fee transfer from plan to prescribed pension vehicle

– e.g., RRSP

admin. can consent to keep in plan– if so: Form P2 - limited member

DC proportionate share formula

FRA 1/2 x [A-B]

FLA Reg. 20:– transfer amount =

– 1/2 (account balance - pre-relationship contributions)

same formula

DB proportionate share formula

FRA 1/2 x A/B FLA Reg. 17:

– proportionate share =– 1/2 x – (pensionable service during entitlement period– divided by– total pensionable service)

same formula

Options for dividing Unmatured DB benefits

s. 115 spouse becomes limited member when member eligible for pension

commencement LM can choose between– 1. lump sum transfer– 2. separate pension

FRA Rule?

separate pension available when member's pension commenced

Valuing spouse's share

- separate pension determined by– assuming member’s pension commences at average

age of retirement for plan– converted into separate pension for LM based on LM's

life expectancy

Death of spouse before benefits divided?

FRA - spouse's share transferred to estate

FLA - same (s. 124(4))

Death of member before benefits divided?

FRA - spouse received share of preretirement survivor benefits

FLA - spouse receives share of benefits determined day before death of member– Survivor benefits based on member’s share– payable to Member's spouse, beneficiary, estate

Transition rules

Agreement made under FRA

FLA in force– - benefits not divided– - member dies

What rules apply?

Transition rules (cont.)

if addressed in the agreement?– that determines spouse's entitlement

if agreement silent?– FLA rules apply (s. 253(2))

if administrator consulted on this issue?– directions received apply

Matured pension

Under the FRA– spouse becomes LM– income stream divided between parties– death of spouse - all to member– death of member - determined by survivor benefit

election

FLA - same

Matured pension - DC account

withdrawals/ variable pension FLA - if funds still in DC account?

– still apply the rules that apply under s. 114

Supplemental Plans

FRA – extraprovincial plan rules– benefit split

FLA – separate pension when member's pension commences– other options available with plan consent

IPP

FLA - separate pension when member's pension commences

other options available with plan consent

Administrative Liability

no obligation to divide until administrator has– forms – agreement/order– admin. fee– other documents reasonable required

incomplete application? – notice obligation discharges liability.

PBSA & Pension Division

Spousal rights under PBSA– survivor benefits

PBSA rules after pension division

FLA – expanded rules about what constitutes division of

pension - s. 145

Drafting Agreements and Court Orders dividing Pension Benefits

Must specify dates common clauses already part of legislation For example

– tax indemnity, trust clauses, liberty to apply

Family Law Agreements - Annotated Precedents

website Q&A

Forms

Form P1, “Claim and Request for Information and Notice”– Same as old Form 1– Can use to authorize representative

Form P2, “Request for Designation as Limited Member” – Same as old Form 1– used any time division is deferred or ongoing

Forms (cont.)

Form P3, “Request for Transfer from Defined Contribution Account”– same as old Form 3– transfer funds to RRSP

Form P4, “Request by Limited Member for Transfer or Separate Pension”– same as old Form 4– elect between lump sum transfer & separate pension

Forms (cont.)

Form P5, “Waiver of Survivor Benefits after Pension Commencement”– designed not to be used

Form P6, “Administrator/Annuity Issuer Response”– used by admin to give notice to member & spouse

Forms (cont.)

Form P7 - “Withdrawal of Notice/Waiver of Claim”– if share of benefits satisfied in some other way

Form P8, “Change of Information” – important: former spouse must keep contact info up to

date.

Forms (cont.)

Form P9, “Agreement to Have Benefits Divided Under Part 6”– DIY

QUESTIONS?