Quick Contact
Ottawa office
466 Tremblay Road
Ottawa, ON K1G 3R1

Tel: 613-231-2266
Fax: 613-231-2345
Toll Free: 1-888-613-1234
Winnipeg office

Mailing address:
P.O. Box 764
Winnipeg, MB R3C 2L4

Street address:
Unit 1391,
1403 Kenaston Blvd.
Winnipeg, MB R3P 2T5

Tel: (204) 942-4438
Fax: (204) 943-5998
Toll Free: 1-888-204-1234


February 06, 2013
Ontario common-law spouses may not get pension death benefits

The Ontario Court of Appeal has ruled that a common-law spouse may not qualify to receive survivor pension benefits, even if he/she is living with the plan member at the time of death.

In a landmark decision, the court said that, under certain circumstances, separated spouses rather than common-law spouses, should be first in line to receive pre-retirement benefits on the death of a member, making the disbursement of survivor benefits more complicated for pension plan administrators.  

The complicated case involved 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.

In her submission to the court, the common-law spouse argued that, as the person living with the member at the time of death, she should receive priority over other claimants to his pension’s benefits.  Her argument was backed by administrative precedence.  Plan administrators often disburse pension benefits to existing common-law spouses ahead of former spouses.  In her case, she argued that more than one person could qualify as a member’s legal spouse.

The man’s former wife maintained that the term “spouse” applied only to legally married individuals.
The problem for the Ontario court was that, technically, both women met the definition of the term “spouse,” as defined under Ontario’s Pensions Benefits Act (PBA).  

Initially, the Ontario Court of Justice sided with the common-law spouse.  The case was then appealled to the Ontario Court of Appeal.  

In its review, the Court of Appeal reviewed Section 48 of the Pension Benefits Act.  While conceding that both women qualified as spouses under the PBA, it noted that Section 48(3), paragraph 28, of the PBA, which deals with the disbursement of benefits to spouses “living separate and apart from the member,” outlines terms and conditions that can only be met by a legally married spouse.  

In the view of the court, common-law spouses can become spouses only by living in a conjugal relationship with a member.  However, since it is possible for legally married spouses to live separate and apart, the terms of the PBA must then refer only to legally married individuals.  As a result, the court awarded the benefits to the separated spouse.

“…it makes no sense to conceive of a common-law spouse living separate and apart from the member,” ruled Justice Russell Juriansz.  “While a person may be a common-law spouse in other contexts, only a legally married spouse can live separate and apart from the member and still be a ‘spouse’ within the PBA.  The circumstances contemplated by Section 48(3) –that the member and spouse are living separate and apart at the date of the death – can only be satisfied by the legally married spouse.”

Reinforcing the decision was the member’s 2002 designation of the ex-spouse and his daughters as beneficiaries of the pension.  Under Section 48(6) of the PBA, “a member may designate a beneficiary and the beneficiary is entitled to be paid an amount equal to the commuted value of the deferred pension if the member or former member does not have a spouse on the date of death or the member is living separate and apart from his or her spouse on that date.”

As a designated beneficiary, the ex-spouse was entitled to the benefit, the Court said.

The Court’s decision was far from straight-forward.  By defining the term “spouse” as a legally married individual under Section 48(3), the Court decision opens the question of whether the spousal definition applies only to Section 48(3) or to the entire PBA.   If the answer is “yes,” then the PBA will contain two spousal definitions, one for Section 48(3) and another for the rest of the Act.  If it is “no,” then common-law partners could, potentially, be disqualified from receiving pre-retirement death benefits, even when they satisfy the definition of common-law spouse.  In addition, the Appeals Court decision was not unanimous, with one of the three justices favouring the argument presented by the common-law spouse.

As a result, an appeal to the Supreme Court of Canada is possible.

For now, under the Ontario Pension Benefits Act, a person living in a common-law relationship with a plan member who is separated but not divorced from his/her ex-spouse may not qualify to receive a pension plan’s death benefits, unless he or she has been specifically designated as a beneficiary under the pension plan.

employee benefits specialists
Personal financial programs for you and your family.