The Ontario government has introduced changes to its Family Law Act to make the division of pension assets easier on divorce.
Under the new rules, which went into effect on January 1, 2012, the two parties involved in a divorce proceeding will no longer have to provide independent actuarial valuations of their respective pension assets. Instead, pension plan administrators must prepare a valuation of the benefits, based on formulas set in the Act. As a result, divorcing couples will no longer have to fight complex legal disputes over which pension valuation to use for asset division purposes.
Another major change involves making the access to pension assets easier for non-member spouses. Under previous rules, non-member spouses often could not receive a portion of the pension until the member had accrued the benefits and left the pension plan, retired or died. Often, this resulted in non-member spouses waiting years to access their share of the pension benefit.
Now, if a member is still accruing benefits, the non-member spouse may receive a lump sum settlement out of the plan, creating an immediate division of the pension assets. This should eliminate the need for “if and when” settlement arrangements during pension divisions.
While the new rules should streamline divorce proceedings and asset divisions, it should be noted that they can only be applied to court orders and separation agreements dated January 1, 2012 or later. Documents dated prior to January 1, 2012 must be administered based on the old rules.
For more information on the changes to the Family Law Act, go to www.fsco.gov.on.ca. Key-in “Division of pensions” in the search field and look for the question and answer format on pension asset division.