New rules for splitting pensions on breakdown of spousal relationships

In the spring of last year, the Ontario government completed a number of legislative changes to family law in the province. One of the changes established new rules for dividing pension assets when a spousal relationship breaks down. As a result, the CAAT Plan now has a new process in place, which came into effect January 1, 2012.

Immediate settlement

The principal change is that the law now provides for an immediate settlement and division of pension assets. Under the previous system, nothing could be finally determined until a member terminated or retired. With immediate settlement, a former spouse is now entitled to his or her share (up to a maximum of 50 per cent of the eligible pension amount) at the point the separation is formally recognized by the courts, an arbitration award or domestic contract.

For retired members, the former spouse may receive a share of the member’s pension.

More information can be found on our website.

Family Law Value

Another change is that the Plan is now responsible for determining the “Family Law Value” – the value of the pension that will be available to be split. In the past, members were responsible for providing their own actuarial calculation of this amount. Members will now deal directly with the Plan on this issue, and will not need to involve their employer’s human resources or payroll departments.

Plan members or their former spouses contemplating a separation settlement are now able to request a Family Law Value from the Plan. It is important to remember that the value will reflect the time period of the spousal relationship only, and not necessarily the member’s full pension accrual.

There is a series of prescribed forms the government has developed for Plan members and their former spouses to use to request and receive the Family Law Value. In most cases, both parties must sign off on the forms. All of the relevant forms are available on the CAAT Plan website. 

Making the split

Once the Family Law Value is established and the Plan receives an application from the former spouse to split the pension assets, accompanied by a court order, domestic contract or family arbitration award, the Plan will have 60 days in which to divide the member’s pension.

The new process applies to all cases with an effective date of January 1, 2012, or later, unless the division of pension had already been agreed upon through a final legal document.