Family Law related FAQs - Preliminary and Family Law Value (Imputed Value) Calculations

 
 
Q1000. What is the Preliminary Value?
 
A1000. The Preliminary Value is the total value of the pension that was earned by the plan member during the period of his or her plan membership up to the Family Law Valuation Date (separation date).
-03/2012
 
 
Q1001. What is the Family Law Value?
 
A1001. The Family Law Value is the “imputed value” under section 67.2(5) of the Ontario Pension Benefits Act [New Window]. The Family Law Value is the portion of the Preliminary Value that relates to the period of the spousal relationship. -03/2012
 
 
Q1002. On the Family Law Valuation Date, an individual was either an active member or a former (deferred vested) member of the pension plan. However, between the Family Law Valuation Date and the settlement/payment date, the individual retired and is receiving a pension from the pension plan. How is the former spouse’s share of the Family Law Value to be determined and what are his or her payment options?
 
A1002. Neither the Ontario Pension Benefits Act nor Ontario Regulation 287/11 explicitly addresses the issues that arise when a member’s status changes between the Family Law Valuation Date and the settlement/payment date. The member’s status on the Family Law Valuation Date determines how the former spouse’s share of the Family Law Value is to be calculated, including the options that are available to the former spouse. If the member was not retired as of the Family Law Valuation Date, the only option that is available to his or her former spouse is a lump sum transfer from the pension plan.
 
Once the former spouse’s share of the Family Law Value has been transferred out of the pension plan as a lump sum, the adjustment to the retired member’s pension should be based on section 33 of Regulation 287/11 with respect to the initial reduction and section 39 of Regulation 287/11 with respect to converting the arrears into pension instalments.  -02/2014
 
 

(Q1003 and Q1004 have been archived - August 2016)

 

 

Q1005. When calculating the preliminary value of a pension benefit, deferred pension or pension, what married assumption should a plan administrator apply?  

 
A1005. When calculating the preliminary value of a pension benefit or deferred pension (i.e. for a member who has not retired as of the Family Law Valuation Date), the plan administrator should use the same married assumption that is used to calculate the commuted value for the pension plan as a whole.  In other words, there should not be a separate married assumption for marriage breakdown calculations.  For example, if the commuted value calculation under the plan assumes that 70 per cent of members will be married and 30 per cent of members will be single, then the same assumption should also be used for marriage breakdown calculations. If a pension plan uses the actual marital status of a plan member when determining the married assumption for commuted value calculations, i.e. 100 per cent married for a married member and 0 per cent married for a single member, the pension plan should assume that the member is married when calculating the preliminary value in order to reflect the value of the member’s pension as a family asset accrued during the marriage, consistent with the Ontario Family Law Act.
 
When calculating the preliminary value of a retired member’s pension, the pension plan should assume that the retired member was married on the Family Law Valuation Date, in order to reflect the value of the retired member’s pension as a family asset accrued during the marriage, consistent with the Ontario Family Law Act.  -02/2014
 
 
Q1006. Should the Preliminary Value of an active member’s pension benefit include survivor benefits?
 
A1006. Yes. In FSCO’s view, the Preliminary Value of an active member’s pension benefit must include the value of any survivor benefit that is payable upon the death of the member after retirement.  For example, if the normal form of pension under a pension plan is a joint and survivor pension, an assumption should be made as to the probability that the survivor pension will become payable when calculating the Preliminary Value. -03/2012
 
 
Q1007. If there is a guarantee attached to the joint and survivor pension, should the value of the guarantee be included in the retired member’s Preliminary Value or in the former spouse’s Preliminary Value?
 
A1007.  Sections 9(2)(b) and 10(2) of Ontario Regulation 287/11 [New Window] state that the value of any pension payable to the former spouse on the death of the retired member is excluded from the retired member’s Preliminary Value and included in the former spouse’s entitlement.
 
The Preliminary Value of the survivor benefit is based on the lifetime pension that would be payable to the surviving spouse. Therefore, it is FSCO’s view that if there is a guarantee attached to the survivor benefit, the value of the guarantee must also be included in the former spouse’s Preliminary Value. 
-03/2012
 
 
Q1008. If the pension-in-pay to the retired member is not a joint and survivor pension (i.e. there is no survivor benefit) but there is a guarantee attached to the pension and the spouse is the beneficiary of that guarantee, should the value of the guarantee be included in the retired member’s Preliminary Value or in the former spouse’s Preliminary Value?
 
A1008. If there is no survivor benefit, the pension payable to the former spouse (i.e. as the plan member’s beneficiary) would not be a lifetime pension. Therefore, in FSCO’s view, if there is no survivor benefit, the value of the post-retirement guarantee should be included in the retired member’s Preliminary Value regardless of whether or not the former spouse is the beneficiary of the guarantee.
-03/2012
 
 
Q1009. When calculating the Preliminary Value for an active member under section 6 of Ontario Regulation 287/11, should the commuted value of bridging benefits be included in the factor “B” calculation for pension plans that provide an age 60 normal retirement date with bridging benefits payable to age 65?
A1009. Yes. Although there is no specific reference to bridging benefits under factor “B” in the Preliminary Value formula (since for most plans the normal retirement date is age 65 at which time bridging benefits would not generally apply), the legislation still requires factor “B” to be calculated in accordance with the specific terms of the pension plan. Therefore, for pension plans with an age 60 normal retirement date, factor “B” must include the commuted value of any bridging benefits. -03/2015

(Q1010, Q1011, Q1012 and Q1013 have been archived – January 2021)
 

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