The following content was archived on the dates provided.
It is available for historical reference.
Archived on June 5, 2015
Q501. A former spouse of a member or former (deferred vested) member is entitled to receive his or her share of the Family Law Value as a lump sum. When interest is paid on this lump sum, will it reduce the member’s or former member’s accrued pension entitlement under the plan?
A501. No. A former spouse’s interest in a pension fund arises on the parties’ Family Law Valuation Date (separation date). When the former spouse’s lump sum is paid out of the pension fund, it is paid with interest from the Family Law Valuation Date to the beginning of the month in which the lump sum is paid. The interest reflects the fact that the lump sum payable to the former spouse of a member or former member remained in the pension plan, earning interest . The payment of the interest does not reduce the member’s or former member’s accrued pension entitlement under the pension plan. -02/2014
Archived on March 19, 2015
Q15.3. Must a pension plan always pay interest to a former spouse of a member or former member when his or her share of the Family Law Value is paid out of the pension plan as a lump sum?
A15.3. Yes. Section 30 of Ontario Regulation 287/11 provides that lump sum payments must be credited with interest, from the Family Law Valuation Date (separation date) to the beginning of the month in which the lump sum is paid to the former spouse. This requirement to credit interest applies whether the former spouse’s share of the Family Law Value is specified as a dollar amount, or as a percentage of the Family Law Value in the parties’ settlement instrument (court order, family arbitration award, or domestic contract) and regardless of the terms of the settlement instrument. A settlement instrument cannot override the requirements of the Regulation.
The rate of interest for defined benefit plans is the same rate that is applied to calculate the preliminary value of the pension benefits or deferred pension. For defined contribution plans, the rate of interest is calculated at such rate of return as can be reasonably attributed to the member’s or former member’s individual account (i.e. reflects the actual gain or loss of the individual account). See sections 30(5) and 33 of Ontario Regulation 287/11. -02/14
Q46. Must pension assets be divided on the breakdown of a spousal relationship?
A46. The division of pension assets on the breakdown of a spousal relationship is not mandatory under the current rules in the Pension Benefits Act, nor will it be mandatory when the new rules come into effect. -06/11
Q47. Must pension assets be included in family property for purposes of equalization of net family property under the Ontario Family Law Act?
A47. Under the Ontario Family Law Act (FLA), the value of married spouses’ pension assets must be included in family property for purposes of the calculation and division of net family property. However, there is no requirement under the FLA for common-law spouses to divide net family property (including the value of any pension assets) on breakdown of their spousal relationship. This will not change when the new rules come into effect. -06/11
Q48. How do the new family law provisions of the Ontario Pension Benefits Act (PBA) apply to Ontario employees of federally regulated pension plans?
A48. Section 10.1(2) of the Ontario Family Law Act (FLA) provides that federal pension plan assets must be valued, “where reasonably possible”, in accordance with section 67.2 of the PBA with “necessary modifications”.
Ontario employees of federally regulated pension plans are subject to the federal Pension Benefits Standards Act, 1985 (PBSA)
. The plan administrator must comply with the minimum legislative standards under the PBSA relating to vesting rules, transfer options, the maximum amount that may be assigned or paid to the former spouse, etc.
Archived on December 14, 2012
Q40. A terminated member has made an election to transfer the commuted value of his pension to his locked-in account. Because the pension plan has a transfer ratio of 70%, 70% will be transferred immediately and the remainder will be transferred in 5 years. Our reading of 2.1(4) of Ontario Regulation 287/11 (Family Law Matters), as amended by Ontario Regulation 467/11, is that the person is not a “former member” for purposes of the regulation. How do we calculate the Family Law Value?
A40. The person in this situation should be treated as a deferred member when determining the Family Law Value of the 30% of the commuted value that remains in the pension plan. The definition of “former member” should not be interpreted in a way to exclude this class of plan member. -12/11
Archived on August 17, 2012
Q15. Effective January 1, 2012, section 3500 of the Canadian Institute of Actuaries Standards of Practice must be used to calculate the Preliminary Value. What must be used if the Family Law Valuation Date (separation date) is before January 1, 2012?
A15. In FSCO’s view, section 3(2) of Ontario Regulation 287/11 requires that section 3500 of the Canadian Institute of Actuaries Standards of Practice must be applied when calculating the Preliminary Value, regardless of the Family Law Valuation Date. This means that section 3500 applies, even if the Family Law Valuation Date is a date before January 1, 2012.
For example, if the Family Law Valuation Date is in 1996, the interest rates must be determined using the methods and CANSIM series outlined in section 3500 in effect at the Family Law Valuation Date in 1996. Those same rates will be used to update the Family Law Value to the date of transfer. Similarly, the mortality table used must also be in accordance with section 3500. -03/12