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June 26, 2013
Supreme Court confirms Ontario ruling limiting common-law rights

The Supreme Court of Canada has dismissed an application to review a January 2013 Ontario Court of Appeal ruling giving priority to separated spouses over common-law partners in the payment of pre-retirement death benefits under the Ontario Pension Benefits Act (PBA.)

The Supreme Court’s decision codifies this payment priority arrangement and reverses the traditional practice of paying pre-retirement death benefits to the common-law spouse living with the pension plan member at the time of death.  

The ruling follows a complicated case involving a married couple that executed a will specifying that the wife would be the sole beneficiary of the man’s estate on his death.  However, the couple separated in 1996 but did not formalize the separation through any legal documentation, such as a separation agreement.  By 2000, the man began a common-law relationship with another woman.   Despite that fact, in 2002, he designated his former wife and their children as beneficiaries of his pension plan.  

In 2008, the man died and both the former wife and the common-law spouse claimed they were entitled to his pension’s death benefits.  The case then went to litigation.

Since, technically, both women met the spousal definition under the PBA, the Ontario Court of Appeal had to focus its review on Section 48 of the Pension Benefits Act, which deals with the disbursement of benefits to spouses “living separate and apart from the member.”  In its view, the terms and conditions in Section 48 of the PBA can only be met by a legally married or separated spouse, thereby giving priority to such spouses over common-law partners. (See January 2013 edition of the Coughlin Courier for background.)

With the refusal of the Supreme Court to review the case, pension plan administrators will be required to provide pension benefits to qualifying spouses rather than to common-law spouses living with a member, unless the spouses have specifically waived their entitlements to benefits under a pension plan.

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