FSCO’s Position on the Implications of the Carrigan Decision

​Overview

 

On October 31, 2012, the Ontario Court of Appeal’s decision in Carrigan v. Carrigan Estate (Carrigan) denied the payment of a pre-retirement death benefit to the common-law spouse of a plan member because the member was still legally married to another person. 

 

On March 28, 2013, the Supreme Court of Canada denied leave to appeal the Court of Appeal’s decision in Carrigan. The denial of leave means the Court of Appeal’s interpretation of the pre-retirement death benefit provision under section 48 of the Ontario Pension Benefits Act (PBA) is now final. The decision directly affects members or former members of a pension plan who:

 

  • have not started receiving a pension;
  • are legally married to a person who they are living separate and apart from; and
  • are living with a person who qualifies as a common-law spouse under the PBA.

In the May 2013 budget, the government announced a commitment to “review the Ontario Court of Appeal’s recent ruling regarding spousal entitlements in the case of Carrigan v. Carrigan Estate, propose amendments to the PBA and, if necessary, amend the regulations under the PBA”.  Until then, FSCO is providing its conclusion of the implications of the Carrigan decision for purposes of the PBA. 

 

Possible Implications for the PBA

 
There are a number of provisions in the PBA and Regulation 909 that grant rights to “spouses” of members, former members and retired members, if the spouse is not living separate and apart from the member when the right is to be exercised. In general terms, it is the Superintendent’s position that in the absence of a tribunal or court decision, the Carrigan decision does not apply to any other provision in the PBA and Regulation 909 that provide specific rights to spouses who are not living separate and apart from the member at the relevant time, because the legislative wording in these other provisions is different from the language found in section 48.
  

Section 44 of the PBA

 

However, there is a special concern about section 44 of the PBA, which sets out the rights of a spouse to a joint and survivor pension, because the legislative wording is similar to the wording in section 48.  After careful consideration, the Superintendent is reading the Carrigan decision narrowly.  In the absence of a tribunal or court decision dealing specifically with section 44, it is the Superintendent’s position that the Carrigan decision does not take away the common-law spouse’s right to a joint and survivor pension under section 44, even if the member is still legally married to another person (who is living separate and apart from the member) on the date the pension begins.  The Superintendent is taking this position for the following reasons:

 

  • The Carrigan decision is inconsistent with the Superintendent’s view of how the spousal rights provisions in the PBA have been previously understood and applied, and should not be extended to other provisions until future decisions explicitly apply the Carrigan decision to these other sections of the PBA.
  • In the Carrigan decision, each of the three judges gave separate reasons for their decision and articulated different interpretations of the “spousal rights” under sections 1(1) and 48 of the PBA. Therefore, it is unclear as to which of these approaches will be applied to other provisions of the PBA.
  • The rationale in support of the majority position that gave the member the “freedom of choice” to decide the beneficiary of the death benefits would not be applicable to section 44.
For these reasons, the Superintendent’s position is that plan administrators are not in contravention of the PBA, if they continue to treat the member’s common-law spouse as entitled to a joint and survivor pension under section 44, even if the member is still legally married to another person (who is living separate and apart from the member at retirement).  Similarly, if the member has a common-law spouse in these circumstances and does not want to have the pension paid as a joint and survivor pension, the common-law spouse should continue to sign the waiver provided for in section 46 of the PBA. 
 

Administration of Pre-Retirement Death Benefits

 
Prior to the Carrigan decision, it was FSCO’s expectation that plan administrators administered the payment of pre-retirement death benefits in accordance with the prevailing understanding of how section 48 applied (i.e., that a pre-retirement death benefit would have been paid to the common-law spouse who was living with the member at the time of death, even if the member was legally married to someone else).
 
Sections 48(9) and (10) of the PBA provide that plan administrators may rely on the information that is provided to them in order to pay the pre-retirement death benefit, and that the administrator is discharged on making the payment if the benefit was paid in accordance with that information.

In light of sections 48(9) and (10), and the prevailing understanding of how section 48 applied prior to the Court of Appeal’s decision in Carrigan, it is the Superintendent’s position that there is no requirement for plan administrators to revisit the payment of any pre-retirement death benefits prior to October 31, 2012.
 

General

 
The Superintendent cautions that this is an area of uncertainty in the law.  It is ultimately the responsibility of each plan administrator, based on their own legal advice, to make a determination on whether the Carrigan decision impacts a specific situation.
 

Information for Plan Members

 
Members or former members who are affected by the decision and who want their common-law spouse to be the beneficiary of their pre-retirement death benefits, may file a current beneficiary designation with the plan administrator, which names the common-law spouse as the beneficiary.  All members and former members should consider obtaining legal advice for retirement and estate planning matters.
 

Other Information

 
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