1.2 Spouse

defined (2)

Does “spouse” in Part 6 of the FLA include someone
who is separated or divorced from their partner?

1.3 Can an annuity be divided between the
parties?

If the pension is being provided through an annuity purchased
from an insurance company, does Part 6 apply?

There is no requirement to involve professionals. All that is really
needed is a very simple agreement made between former spouses, that:

1. contains sufficient information to identify the plan or respecting the employment under which the member accrued the benefits,
2. provides that the benefits are to be divided between the parties (it helps to refer to Part 6, but Part 6 will apply even if not specifically referred to in the agreement), and

3. sets out the dates for determining the spouse’s share of the benefits.

[See para 2.24, 11.3 and 13.12] If the agreement does not set out a percentage, but does set out the dates of the relationship, then the parties will each receive a 50% share of the benefits that accrued during the specified period. Form P9 in the Division of Pensions Regulation is an agreement that can be used if the parties choose.

The pension division agreement would be sent to the administrator of the plan with prescribed Forms.

However, this is a complicated area of the law, and the financial consequences of your decisions may be considerable. As with any complicated area of the law, if you do not consult an expert, you may
not be completely aware of your rights. A member may give up too much, or a former spouse receive too little.

A Certified Financial Planner can assist you in determining how best
to use your retirement assets to produce lifetime income. A lawyer can
make sure that the arrangements for dividing the benefits are effective.
An independent actuary (i.e., an actuary that is not working on behalf
of the pension plan at issue) can tell you how much the benefits are
worth—note that a pension plan’s actuary is typically unable to provide
members or spouses with actuarial estimates. Parties may benefit from
obtaining actuarial estimates if they are taking the benefits into account in dividing other assets. For example, the parties could agree that the member keeps the pension benefits, and the former spouse keeps other assets, such as the family residence.

No. Pension plans registered in B.C. are governed by the Pension Benefits Standards Act, SBC 2012, c 30 (the “PBSA”) and the Pension
Benefits Standards Regulation, BC Reg 71/2015.

1.6 Must

agreement or order specifically say benefits are being
divided?

The legislation seems to say that it operates whenever a
spouse is entitled to a share of pension benefits under Part 5.
Entitlement under Part 5 arises automatically on the separation of the parties. [FLA, s 81(b)] Is it necessary to have an agreement or order that specifically says the benefits are to be divided?

1.7 Will Part 6 apply in every case?

If benefits are to be divided, does it have to be in accordance with Part 6?

1.8 Referring to

Part 6

If Part 6 is to apply, does the order or agreement have to specifically refer to Part 6 of the FLA?

1.9 Local plans: does Part 6 of the FLA
apply?

How do I find out if my spouse’s benefits are in a plan that is subject to Part 6 of the FLA?

1.10 Working in different provinces

The member earned pension entitlement under a single employer, but while working in a number of different provinces (as follows):

Alberta: 1980-1995

Saskatchewan: 1995-2000

B.C.: 2000-2012

What law governs the division of these benefits? Are these benefits in a “local plan”?

1.11 Employment termination benefits

In addition to the pension benefits, the member is also
entitled to other benefits on terminating employment, including substantial severance benefits paid by the employer. Are these divisible under Part 6?

1.12 Federal PBSA

If a B.C. member has benefits in a plan that is registered under the federal Pension Benefits Standards Act, is it divisible under Part 6 of the FLA?

1.13 Extra-

provincial Plans

What is an example of an extraprovincial plan?

A plan registered outside the province, which has no B.C. members and where the member earned all pension entitlement in employment outside the province, is an “extraprovincial plan.”

Federal public sector plans, and the Canada Pension Plan, are also regarded as “extraprovincial plans”. [Elliston v Elliston, 2015 BCCA 274; H.E.D.C. v R.M.C., 2003 BCCA 420 at paras 43-44; Baker v Baker, 1998 CanLII 2902, 34 RFL (4th) 364 (BCSC); Coulter v Coulter, 1998 CanLII 5677, 60 BCLR (3d) 6 (BCCA)] A common mistake about Part 6 of the FLA is to assume that any plan located outside B.C. is an extraprovincial plan. Many plans located outside the province, even those registered in other provinces (or subject to federal legislation) will, nevertheless, qualify as local plans from the perspective of a member that worked in B.C. while earning the pension.

The definition of “local plan” is structured to include any plan, wherever registered, that is subject to B.C. law and may include plans that are located outside B.C. (see FLA, s 110, definition of “local plan”, and para 1.9).

“Extraprovincial plan” is defined as a pension plan that is not a local plan (FLA, s 110). Consequently, the Part 6 rules apply comprehensively to all plans that provide pension benefits, although the division rules vary, depending on whether the plan is a local plan or an extraprovincial plan.

Most cases involving extraprovincial plans will involve a spouse and member who moved to B.C. after the member retired and the pension commenced. The jurisdiction of the plan member crystalizes on
retirement, and a move in retirement does not alter the member’s province of record in the plan membership files.

[See further Chapter 7]

Yes, because the member is earning benefits from employment in B.C.

If the member’s benefits accrued from employment in B.C., yes, it is.
However, U.S. federal legislation provides methods of dividing U.S.
pension benefits which must be taken into account when dividing those
benefits. A B.C. court will not make an order applying B.C. law to
assets in another jurisdiction if that order is not enforceable in the
other jurisdiction. [FLA, s 106(5)(e)(ii)] To divide a U.S. based pension at source it is advisable to consult a lawyer in the plan’s jurisdiction.

It depends on where the member and spouse live and where the member worked while accruing pension entitlement.

For example: member and spouse live in B.C., but the member works in Alberta and accrues pension entitlement in Alberta, although the plan is registered in B.C. Because the parties live in B.C., B.C.’s family law would govern how to divide their family property (including the pension benefits). Because the member reports to work in Alberta, it
is necessary to first confirm with the plan that the member is indeed an
Alberta member in the plan records. If so, Alberta provincial property
law will operate to divide the pension and not Part 6 of the FLA.

[See Chapter 14]

1.19 RRSPs and locked-in funds in a
LIRA

Do the Part 6 rules regarding the division of benefits apply to Registered Retirement Savings Plans (“RRSPs”) and Locked-In
Retirement Accounts (“LIRAs”)?

The FLA provides that the valuation date for these types of family property is the date the agreement dividing the benefits is made, or if they are divided by court order, the date of the hearing. [FLA, s 87. Different dates are specified under the Division of Pensions Regulation for dividing pension benefits.]

But another date can be used by agreement, or court order. In many cases, because of events taking place after separation (withdrawals from an account for example, or investment volatility) the date of separation may produce a fairer result, particularly where both parties have family property that is being divided: J.S.P. v J.H.S., 2015 BCSC 1239 at para 254, reversed on appeal, but not on this point, 2016 BCCA 344. The trial court ordered that the parties each keep their respective RRSPs, pension plan benefits and investment accounts because the values in the hands of each party were similar at the time of separation.

Old Age Security benefits were considered to be family assets under the FRA by definition (FRA, s 58(3) provided that “family asset” included “(d) the right of a spouse under an annuity or pension, home ownership or retirement savings plan”). [See Lattey v Lattey, 1989 CanLII 2803. 21 RFL (3d) 229 (BCSC). The B.C. Court of Appeal has referred to the question but not considered it: O’Bryan v O’Bryan, 1997 CanLII 4045, 43 BCLR (3d) 296 (BCCA). Different approaches have been adopted in other parts of Canada. [See, for example, Podemski v Podemski, 1994 CanLII 9149, 6 RFL (4th) 131 (Alta QB), where it was held that OAS benefits were not divisible property.]

The FLA carries forward a similar definition of “family property” (FLA, s 84(2)(e) provides that family property includes: “a spouse’s entitlement under an annuity, a pension plan, a retirement savings plan or an income plan”). However, to date, there have been no reported decisions in which the courts have considered whether OAS benefits are family property under the FLA.

Even if OAS benefits are considered to be family property there is no method of dividing OAS benefits at source. They do not come within Part 6, and the Old Age Security Act does not provide a mechanism for dividing the benefits, so any arrangements would have to be administered by the parties.

|

| No.

V

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| No.

V

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| No.

V

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| No.

V

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| No.

V

Pension in a federal public sector plan,

for example a plan under the

• Canadian Forces Superannuation Act
• Defense Services Pension Continuation Act
• Diplomatic Service (Special) Superannuation Act
• Governor General’s Act
• Lieutenant Governors Superannuation Act

• Members of Parliament Retiring Allowances Act

• Public Service Superannuation Act

• Royal Canadian Mounted Police Pension Continuation Act

• Royal Canadian Mounted Police Superannuation Act

• Special Retirement Arrangements Act

Pension
Benefits Division Act, SC 1992, c 46

The spouse is entitled to a share of the commuted value of the
benefits that accrued during cohabitation (unless another period is
specified by court order).

This share would be transferred to the spouse’s credit (to, for
example, an RRSP or RRIF, if the benefits are not locked-in, or a LIRA
or LIF for locked-in benefits).

Benefits in a provincially regulated plan (one that is subject to the
B.C. Pension Benefit Standards Act, or the equivalent Act in
another Canadian province or territory).

Family
Law Act (B.C.) (if B.C. law applies, otherwise, the equivalent
legislation in the province whose laws govern the disposition of family
property when a relationship ends)

See Table 1: Is the Plan a Local Plan?

Old Age Security

Family
Law Act (B.C.)

Fall within the definition of family property under Part 5 but not
usually divided and no pension division mechanism.

Benefits Determined by Benefit Formula Provision (including
LIRA and LIF benefits transferred from a plan with a benefit
formula)

The spouse becomes a “limited member” of the plan, who is entitled,
after the member is eligible for the pension to commence, to choose
between

1. having the commuted value of the spouse’s share transferred to, a
   LIRA, RRIF, LIF, annuity or another pension plan [PBSA,
   s 88], so long as that option is available to the plan member,
   or
2. receiving the share in the form of a separate pension payable for
   the limited member’s lifetime.

(see Chapter 2)

The spouse becomes a “limited member” of the plan and receives a
share of each monthly payment from the plan.

(see Chapter 5)

Benefits in Supplemental Pension Plan

The spouse becomes a “limited member” of the plan, who is entitled,
when the member’s pension commences, to receive a separate pension
payable for the limited member’s lifetime.

The spouse becomes a “limited member” of the plan and receives a
share of each monthly payment from the plan.

(see Chapters 5 and 6)

Other options are available with administrator consent.

(see Chapter 6)

Disability Benefits paid Under a Pension Plan

The spouse becomes a “limited member” of the plan and receives a
share of each monthly payment from the plan.

(see Chapter 9)

Benefits in Extraprovincial Plan

Divided by methods applied in the plan’s jurisdiction (unless that
would produce an unfair result under B.C. law).

Otherwise, the spouse waits until the member’s pension commences and
receives a share of each monthly pension payment from the plan
administrator.

(see Chapter 7)

Divided by methods applied in the plan’s jurisdiction (unless that
would produce an unfair result under B.C. law).

Otherwise, the spouse waits until the member’s pension commences and
receives a share of each monthly pension payment from the plan
administrator.

(see Chapter 7)

A limited member has the rights of a member, unless they are
expressly excluded. [FLA,
s 113(3)] Specifically:

1. to receive from the administrator direct payment of a separate
   pension or, if the option is available to the member, a proportionate
   share of benefits paid under the pension;
2. to enforce rights against the administrator and recover damages
   for losses suffered as a result of a breach of a duty owed by the
   administrator to the limited member;
3. except as modified by Part 6 of the FLA, all of the
   rights of a member under the PBSA;
4. to receive directly from the administrator information about the
   member’s benefits and the limited member’s share in it. [FLA,
   s 133; Reg.,
   Part 3, Administrator’s Duty to Provide Information;
   see paras 15.19 to 15.23]

See also para 10.6.

Yes. A limited member has the rights that a member has. [FLA,
s 113] A limited member, consequently, would be entitled to the same
ad hoc pre-retirement and post-retirement enhancements available to
other pensioners.

A limited member would not, for example, be entitled to group
benefits members have because they are employees, such as to participate
in a group life insurance plan or enjoy extended medical and dental
benefits.

2.4 The member’s elections

The member has remarried but is not yet receiving a pension.
The member’s former spouse is a limited member of the plan and entitled
to a share of the benefits. How does this affect elections the member is
entitled to make? The member wants to protect the new
family.

2.5 Changing the beneficiary
designation

The member has not yet commenced receiving a pension. Before
the breakdown of the relationship, the member designated the former
spouse to be beneficiary of any survivor benefit under the pension plan.
The benefits are now subject to a pension division agreement under Part
6 of the FLA. The survivor benefits exceed the share of the
pension benefits to which the former spouse is entitled. Can the member
take any steps to make sure that the portion of the survivor benefit
that exceeds the former spouse’s share goes to his new
spouse?

2.6 Why are DB provisions treated

Why is the method for dividing a defined contribution account
not used for unmatured benefits determined by a benefit formula
provision?

Benefits in a defined contribution account are determined by
contributions made by the employer (and, perhaps, the member) plus net
earnings made from investing those contributions. The value of a defined
contribution account is its current balance.

The value of benefits determined by a benefit formula provision, on
the other hand, because they depend on a formula, may differ from the
total of contributions and investment returns.

Between these two types of plans, it is more difficult to value
benefits determined by a benefit formula provision because assumptions
must be made about a number of future events (when will the member’s
pension commence, for example, and how long is the member likely to
live?). And it is highly unlikely that contributions made to the plan up
to the time of the breakdown of a relationship would be enough to
satisfy the estimate of the future benefit’s value. Even if there is
enough money, it may not be fair to one or more of the member, spouse,
plan or other plan members in the circumstances to base the spouse’s
share on the particular assumptions that are made. That is because the
valuation will necessarily be based on predictions about the average
experiences of a group. No approach to valuation based on average
experiences can possibly be fair in every individual situation
that can arise.

For example: say the pension benefits are valued taking into
account the prospect that the member will stay in the plan until an
unreduced pension becomes payable. This would place a fairly high value
on the benefits and the spouse’s share. After the spouse’s share is
transferred, however, the member might immediately terminate
employment.

To deal with the special problems presented by benefit formula
provisions, deferred methods of pension division are employed. The
former spouse becomes a limited member of the plan. A limited member can
choose between either the separate pension option (FLA,
s 115(2)(a)), or the lump sum transfer option if the member also has
this option (FLA,
s 115(2)(b)), but not until, at the earliest, the date the member
could choose to have the pension commence. When the limited member
chooses to receive the share, it is valued at that date, using specified
assumptions about future events.

Yes, the limited member can choose to take the share of the benefits,
even if the member is still working. Part 6 is structured to permit both
parties to use their respective shares of the benefits to suit their
individual needs. Confining the limited member’s entitlement to benefits
payable only after the member terminates employment and commences
receiving a pension would prejudice the limited member. (The limited
member typically requires income to start earlier than the plan member,
who is prepared to defer receiving pension benefits because any loss in
value is more than compensated by employment income). Part 6 provides
that the options available to the limited member for receiving the share
of benefits are available no earlier than the earliest date that the
member could elect to have the member’s pension commence [FLA,
s 115(3)]. The earliest date is determined by the pension
eligibility provisions under the specific pension plan, regardless of
whether the plan member actually decides to retire, or to keep working
and continue to earn benefits under the plan.

2.9 Dividing a pension in a flat benefit
plan

How is a former spouse’s proportionate share of pension
benefits determined if the rates of accrual on benefits differ for
different periods (which may be the case, for example, with flat benefit
plans)?

Yes. The limited member receives the share of the benefits calculated
in accordance with the Division of Pensions Regulation:
see para 8.3. [FLA,
s 124(2)]

The Division of Pensions Regulation provides that the plan
administrator must calculate the benefits as of a date not earlier than
the end of the month immediately preceding the day before the death of
the member. This means, for example, that if the member dies on Feb.
2nd, the plan administrator must calculate the benefits as of Jan. 31st.
If the member dies on Feb. 1st, the plan administrator must calculate
the benefits as of Dec. 31st of the previous year. [Reg.,
s 23(3)(c)]

[See further paras 2.5, 2.44, 8.3 and 8.15 and Chapter 8
generally]

For the position that applies if the limited member dies before the
member, and before the benefits are otherwise divided, see para
8.1.

If the member dies before the former spouse becomes a limited member,
then protecting rights in the pension benefits becomes complicated. The
former spouse is entitled to survivor benefits if he or she qualifies as
a “spouse” under the PBSA, but spousal status under that Act is
lost after 2 years since separation for married spouses, and immediately
after separation for parties whose relationship was based on a 2-year
marriage-like relationship. [PBSA,
s 1(3)] Property rights under the FLA, however, arise on
separation, so the surviving former spouse may be able to pursue a claim
to pension benefits under Part 6, but the surviving former spouse would
have to move quickly to protect that claim: see Howland
Estate v Sikora, 2015 BCSC 2248. What this means in
practice is that, in order to gain the full protection of Part 6, a
former spouse should not delay in becoming a limited member.
See also para 8.14.

2.12 The member terminates employment
(2)

If the member leaves employment, and decides not to request a
transfer of commuted value to another plan (but instead decides to take
a deferred pension), what rights does the limited member
have?

2.13 Member

transfers entitlement to another plan

If a member who has terminated employment directs the
administrator to transfer the commuted value from the plan (plan1) to
another plan (plan2), can the limited member require plan1 to retain the
limited member’s share?

2.14 The plan is terminated or partially
terminated

What happens to the limited member’s entitlement when the
plan is terminated or partially terminated?

2.15 Plan surplus or actuarial excess

Is a limited member entitled to share in surplus or actuarial
excess declared by the plan?

2.16 The plan has a solvency

deficiency

If the plan has a solvency deficiency, does that affect the
limited member’s entitlement?

2.17 Proportionate share (Reg., s 17)

How is the limited member’s share of benefits
determined?

2.18 Determining the proportionate
share

How is the limited member’s proportionate share
determined?

2.19 Proportionate share when benefits are
transferred from the plan

The limited member has requested a transfer of the limited
member’s share from the plan. Reg., s 17(3)(a) directs that
total pensionable service be determined by reference to the date that
the share is transferred, but we won’t know that until the transfer is
actually made, and it’s difficult to anticipate how much time will be
involved in calculating the share, giving instructions to the fund
holder, and the fund holder being able to finalize the transfer. How do
we determine the proportionate share in this case?

2.20 Proportionate share of a matured
pension

Reg., s 17 provides the formula for the
proportionate share. For a matured pension it provides that the
numerator is determined by pensionable service accruing up to the
spouse’s “entitlement date” (Reg., s 1(1), definition of
“entitlement period”). In this case, the entitlement date is January
2015. The member’s pension commenced in 2012. How do we calculate the
proportionate share?

2.21 Proportionate share and purchased
service

What is meant under Reg., s 18, which excludes any
pensionable service purchased by or on behalf of the member before or
after the entitlement period?

July 1, 1975

member begins cohabiting with his or her spouse

Jan. 1, 1980

member resumes employment and rejoins the plan

Dec. 1, 1999

member buys back part of the pensionable service withdrawn in 1978
(the equivalent of 2 years’ service)

2.22 Flexible benefits and enhanced pension
entitlement upgrades

Our plan is part of a flexible benefits employment package. A
member may decide to forego other employment benefits in exchange for an
enhanced pension. But the member does not purchase “service”. In our
case, the enhanced value takes the form of indexing. If the member
decides, after the entitlement date, to enhance the pension, is the
limited member entitled to any share of that?

2.23 Proportionate share and benefit
upgrades

Would benefit upgrades that are credited after the
entitlement period be included in determining the proportionate share?
Does it matter whether these benefit upgrades are paid for by the member
or the plan sponsor?

“Entitlement date” is defined in Reg.,
s 1 to mean the date specified in an agreement or order on which the
spouse becomes entitled to an interest in the member’s benefits. The
entitlement date is used both to confirm that the former spouse is
entitled to a share of the benefits and to determine the end date of the
portion of the pension benefits that is subject to division.

Section 81(b)
of the FLA provides that spouses each become entitled to a half
interest in family property (including pension benefits each of them may
have) when the parties separate.

The parties, or the court, may select the separation date, or another
appropriate date, as the spouse’s entitlement date.

The FRA provided rules for determining the entitlement date,
if it was not specified in the agreement or court order. The position is
different under the FLA where, in order to divide the benefits,
the administrator must be advised of the entitlement date. It can be
specified in the court order, or in the parties’ agreement. If the order
or agreement is silent, this can usually be addressed by the parties
signing a further agreement in the form of joint directions, providing
the missing information. [Reg., s 1, definition of “entitlement
date”; FLA,
s 137] The reference in the FLA and the Division of
Pensions Regulation to a single order or agreement does not mean
that these issues cannot be addressed in a combination of agreements or
court orders. In an enactment, words in the singular include words in
the plural. [Interpretation
Act, RSBC 1996, c 238, s 28(3)]

The parties must provide the administrator with information about the
entitlement date in writing before the benefits can be divided.

The entitlement date is used to determine the spouse’s proportionate
share of the pension benefits. But the proportionate share may be
changed by the agreement of the spouse and member, or by a court order,
and one way of changing the proportionate share would be to select
another entitlement date. [Reg.,
s 1, definition of “entitlement date”. See further Chapter
11] (Another way would be for the agreement or order to set out a
different formula or fraction.)

No.

Mailhot held that all of the pension benefits accruing up to
the breakdown of a relationship, including pre-relationship accruals,
constitute a family asset to be divided equally between the spouses.
After Mailhot was decided, however, B.C. pension division
legislation was revised to divide only those benefits earned during the
relationship, and this policy has been carried forward in the
FLA rules about excluded property. [FLA,
s 85] The result is that the principle in the Mailhot case
has been reversed by legislation (as explained in Park
v Park, 2000 BCCA 92).

Mailhot, however, would still apply to agreements or orders
made before July 1, 1995, the date B.C. pension division legislation was
first revised to exclude pre-relationship benefits from automatic
division. [See para 2.28]

Pre-relationship accruals can be divided between the member and
spouse, however, if:

(a) the parties agree to do so; or

(b) if a court holds that it would be unfair to exclude that portion
of the pension benefits from being divided [FLA,
s 95(1)(b)]; or

(c) if to do so would produce a better result than awarding ongoing
support. [FLA,

s
129]

A reasonable approach would be to use the model employed in Reg.,
s 17 but specify an earlier commencement date that includes the
portion of pre-relationship service that will be shared with the former
spouse.

Dividing pre-relationship (or post-separation) accruals is a form of
reapportionment. The court may reapportion pension benefits for the
purpose of providing the spouse with an independent source of income
if it is necessary, appropriate or convenient and
addressing the spouse’s need to become or remain economically
independent would otherwise require the member to pay support or a
portion of their pension benefits to the spouse. [FLA,
s 129]. Similar factors were considered under the FRA:
Parent v Parent, 2012 BCSC 723.

Case law under the FRA suggested some other circumstances
where benefits earned before the parties commenced living in a
marriage-like relationship should be divided (although it remains to be
seen whether these will continue to be considered relevant). Two
examples:

• the case involves a long relationship during which most of the
  pension was earned [Shirran
  v Shirran, 1999 CanLII 5926, 46 RFL (4th) 371
  (BCSC)]
• the spouse brings assets into the relationship that are used to
  benefit the family or end up being divided equally. [Sangha v
  Sangha, [1998] BCJ No 1087 (Lexis) (BCSC)]

Case law under the FLA suggests that reapportionment of a
pension is unlikely where other options are available to address the
spouse’s need for economic independence (for example, see Duursma
v Duursma, 2020 BCSC 667), but that it may be ordered
in the right factual circumstances. For example, in Kraft
v Kraft, 2018 BCSC 496 the spouse received a 50% share of
the pension (instead of an approximately 31% share based on the period
of the relationship) where the member had previously failed to meet his
spousal support obligations.

This was a question considered by the courts a number of times under
the FRA and it was eventually decided that, in most cases,
benefits earned during prior cohabitation should be divided.

Under the FLA, the starting point is that benefits earned
during cohabitation in a marriage-like relationship are divisible. But
it is still necessary for the commencement date of the relationship to
be specified by agreement or court order. It is not the administrator’s
responsibility to determine when a marriage- like relationship
commences.

If the order or agreement was made before July 1, 1995, and is
otherwise silent on this issue, Mailhot would apply to include
all pre-relationship accruals: see para 2.25. If the order or
agreement was made under Part 6 of the FRA, and it does not
specify the dates to be used, it is from the date of marriage to the
triggering event. (Under the FRA, the triggering event was the
first of the following to occur: the date the parties made a separation
agreement or the date the court made a declaration of irreconcilability
under FRA, s 57, or an order of divorce, nullity or judicial
separation: FRA Division of Pension Regulation, s
1, definition of “entitlement date” and s
6(1). For more information, see the 2001
Q&A).

See para 14.9.

Pension entitlement purchased before the relationship began, and
after the breakdown of the relationship, won’t ordinarily be
divisible.

The Division of Pensions Regulation provides a formula for
determining the former spouse’s “proportionate share” for dividing the
pension benefits. [Reg.,
s 17] It is based on pensionable service accumulated (including
purchased) by the member during the relationship. Any pensionable
service accumulated after the

2.30 Pension

entitlement purchased during the relationship

The member purchased additional pension entitlement during
the relationship, but it relates to a period before the relationship. Is
that included in the division?

2.31 Pension

entitlement purchased on installment plan

The member purchased additional pension entitlement during
the relationship, but payment is on the installment plan. It wasn’t all
paid for by the time of the breakdown of the relationship.

2.32 Prior service credit

In some cases, pension benefits might be enriched, not by
increasing entitlement attributable to a particular period, but by
crediting the member with additional pensionable service. This might
take place, for example, where the member must be employed for a minimum
period before becoming a member of the plan and the probationary period
is eventually included as part of the member’s service. What rights does
a spouse have where the plan credits the member with additional
entitlement during the relationship that relates to a period before the
relationship?

2.33 Court orders member to restore
service

The member withdrew part of the pension benefits during the
relationship. It is possible to restore the lost service. The court has
ordered the member to do so and also ordered that the spouse’s share of
the pension entitlement be based on the restored service. What is the
plan’s obligation?

2.34 Special cases: Cap on service, banked
credits, flex benefits, service measured in hours

Some cases are not clearly addressed under the Division
of Pensions Regulation. What should the plan do if:

1. the plan sets a cap on service (for example, the
   plan provides that the maximum pension is earned by a member upon
   completing 35 years of service)? How does that affect the “proportionate
   share”? Does that cap the denominator for determining the spouse’s
   share?
2. the member uses banked credits, earned during
   the relationship, to acquire pension entitlement at a later date? Is
   service that is acquired with banked credits considered to be acquired
   during the relationship, or after the entitlement
   date?
3. as part of a flex benefits package, the member
   may choose to give up, for example, a dental plan in exchange for
   enhanced pension entitlement, or decide on smaller pension benefits in
   exchange for other benefits. How do the member’s choices affect the
   limited member’s interest in the benefits?
4. pensionable service is measured by the plan in terms
   of hours, or bands of hours, worked, rather than months or parts of
   months? How is this accommodated by the formula for the proportionate
   share?

2.35 Pensionable service increases without
increasing pension value

In some cases, pensionable service increases but there is no
corresponding increase in the size of the pension (such as, for example,
where there is a cap on service, a maximum pension is defined under the
plan text, or the ITA ceiling on benefits payable under a
registered pension plan applies). How is this dealt
with?

2.36 Dividing a divided portion

Suppose a spouse acquires a share of a member’s benefits on
the breakdown of a relationship. If the spouse remarries, can the new
spouse claim an interest in the pension entitlement on the break-up of
the second relationship?

The plan text can permit the plan administrator to require a member
to take a pay out instead of receiving a pension if the commuted value
of the benefit is less than 20% of the Year’s Maximum Pensionable
Earnings as established by the Canada Revenue Agency. [PBSA,
s 89(2); PBSA
Reg., s 82]

The FLA provides that an administrator can require a former
spouse to take a transfer in any situation in which it could have
required a member to take a transfer [FLA,
s 139(b); Reg.,
s26]

If the basis for requiring the former spouse to receive a transfer is
that it is less than the prescribed amount, when dealing with benefits
that will increase in value over time (as with a final average plan)
this test cannot be applied until the spouse’s share is to be determined
(which would not be until the limited member decides to take the
share).

The locking-in rules apply to pension benefits in the hands of a
former spouse to the same extent as they apply to plan members, whether
the benefits remain in the plan or are transferred from the plan to
another financial vehicle. [See Chapter 10, and para 10.4 in
particular.]

Limited members have rights enjoyed by plan members in general, with
respect to the benefits that are being divided, but those rights are not
confined by the personal position of the specific member. The limited
member will only have the right to receive their share of the benefits
by a lump sum transfer if the member has the right to do so. However, if
the limited member is permitted to their share of the benefits in a lump
sum to a LIRA, the unlocking options available to owners of LIRAs would
be available to the limited member, based on the limited member’s
personal position. For example, benefits can be unlocked if the owner of
the account is a non-resident. If the limited member is a non-resident,
this option would be available to the limited member, even if the member
is still a Canadian resident. [See Chapter 10, and para 10.6 in
particular]

The limited member’s portion would be determined as a proportionate
share of the commuted value of the benefits calculated assuming the
pension commences at the later of the member’s actual age and the
average age of retirement for the plan [Reg.,
s 23(4)], and in accordance with accepted actuarial practice in
Canada, consistent with the Canadian Institute of Actuaries Standard of
Practice for determining commuted values. [FLA,
s 110, definition of “commuted value”; PBSA
Reg., s 9] Different rules apply for calculating the commuted
value of benefits determined by a target benefit provision. [PBSA
Reg., s 9(2). See para 2.76]

See also paras 2.59 and 2.70 (for alternatives to using the
average age of retirement), paras 3.11-3.12 and Chapter 10.

The choice is exclusively that of the limited member. It is exercised
by sending Form P4 to the plan. [FLA,
s 115(2)] However, if at that time the limited member wishes to
access their benefits, the member is not entitled under the rules of the
plan to a lump sum transfer, then the limited member is restricted to
the separate pension option.

2.43 Transfer

alternatives

The member is eligible for pension commencement but hasn’t
made that election yet. The former spouse has asked for a transfer of
pension entitlement (as is permitted under the legislation). Is this
option available to the spouse?

2.44 Reasons for taking the transfer of
commuted value

When would the spouse choose to take the transfer of commuted
value (if permitted by the plan) instead of the separate
pension?

2.45 Reasons for taking the separate
pension

When would the spouse choose to take a separate
pension?

2.46 Need to value before making the
election?

Does a spouse need to know the value of the benefits in order
to make an informed choice between the lump sum transfer and separate
pension options?

2.47 Spouse’s share based on the “normal
form”

Whether the spouse takes a lump sum transfer, or a separate
pension, the spouse’s entitlement is based on the “normal form” of the
pension under the plan. Our plan has two normal forms, depending upon
whether or not the member has a spouse. Do we determine the normal form
to use by whether the member has a spouse or whether the limited member
has a spouse?

2.48 Subsidized early retirement and trustee
consent

In our plan, the value of an early retirement pension is
subsidized, provided the trustees consent. For the purpose of
determining the limited member’s share, should the commuted value of the
benefits be calculated on the basis that consent has, or has not, been
given?

Many provinces that have pension division legislation provide for a
transfer of the spouse’s share on separation. The value placed on the
spouse’s share is frequently (particularly for private sector plans)
much lower than the value the benefits will probably eventually have
because it is based on the assumption that the member leaves employment
on the date of separation. This approach to valuation often ends up
allocating the lion’s share of the benefits earned during the
relationship to the member.

An immediate transfer at a low value does not benefit a spouse,
particularly when the transfer is locked-in until the spouse reaches a
retirement age (that is, the spouse is going to have to wait a period of
years to be able to use the money in any event). By deferring the
transfer date, in most cases a significantly higher (and fairer) value,
one closer to the value the member will derive from the member’s share,
will be placed on the spouse’s share of the benefits.

2.52 S 115(2)(a):

Determining the separate pension

The limited member has selected a “separate pension”. How is
the separate pension determined?

2.53 S 115(2)(a):

what unisex mix should be used?

The limited member has selected a “separate pension”. Our
actuary has asked for directions concerning how to determine the limited
member’s entitlement on a gender neutral basis: are we to use the unisex
mix we use for the general plan (which is 60% Male, 40% Female)? Or
should the unisex mix be flipped for the spouse (to 40% Male, 60%
Female), which is the same approach we adopt for determining benefits
payable to the spouse under our plan in non-marriage breakdown
cases?

2.54 Form of pension

The legislation says the administrator must make available to
the spouse the options for the separate pension it offers members of the
plan. Who gets to choose the option: the spouse or the
administrator?

2.55 Income Tax Act and spouse’s
election

The legislation allows a spouse to select among options
available to members of the plan, including a joint
survivor annuity. But doesn’t this conflict with Regulations
under the Income Tax Act (particularly Reg., s
8503(3)(l))?

2.56 Supplementary Pension Plans
(“SPP”)

Members of our plan are entitled to supplementary benefits
financed from company revenue. The additional benefits are based on the
member’s average earnings and regular pensionable service that exceed
the maximum amounts CRA will allow to be paid under registered pension
plans. Are these divisible?

2.57 When the member takes early
retirement

The member has decided to take early retirement. May the
limited member transfer the proportionate share of the pension to a
LIRA, or does the limited member now have to receive a separate
pension?

2.58 Age adjustment

When determining the spouse’s separate
pension under Reg., s 24, how are differences in ages between
the member and the spouse taken into account?

An administrator of a plan is required to file an actuarial valuation
report for funding purposes with the superintendent. The report will
either specify an assumed age of retirement for plan members [Reg.,
s 1, definition of “average age of retirement”] or the proportion of
plan members retiring at each age that would allow the plan
administrator to determine an “average age of retirement” based on such
proportions.

The report will also include a solvency valuation that may use a
different average age of retirement. For the purposes of pension
division under the FLA, it is the average age of retirement
that is used in the funding actuarial valuation (the “going concern”
valuation), not the one used in the solvency valuation (which is driven
by special government requirements).

The plan may have established average age of retirement assumptions
that are based on age and service of members. If so, the average age of
retirement would be determined by the age and service referable to the
member.

Some plans will specify an average age of retirement for female
members and a different average age of retirement for male members.
However, under B.C. law, an administrator cannot discriminate based on
differences in gender. [See, for example, PBSA,
s 10]. In these cases, the average age of retirement should be
determined on a unisex basis (just as mortality is determined on this
basis, and it would be appropriate to use the same unisex weighting that
the administrator applies to mortality).

The legislation recognizes that it may be more convenient for a plan
with many members to specify a different average age of retirement for
the purposes of the FLA. For example, it may simplify things,
where the plan determines the average age of retirement by some kind of
formula, to use a single average age of retirement, or adopt a different
formula, and an administrator may choose to do this, provided the age
that is selected is younger than the average age of retirement for the
plan. [Reg.,
s 23(5)]

Some plan administrators have indicated that they would prefer to
continue using the calculation of the commuted value in accordance with
the Canadian Institute of Actuaries’ Standards of Practice for Pension
Commuted Value. The calculation takes the average of the value assuming
pension commencement at the earliest unreduced retirement age and the
value assuming pension commencement at the optimal age (i.e., the
retirement age that produces the highest commuted value). Such
calculations would also be permitted under s 23(5). See para
2.70.

2.60 Average age of retirement or actual
age

The benefits have not yet been divided, and the member has
elected to have the pension commence. The limited member has chosen to
receive a separate pension. The member has not yet reached the average
age of retirement for the plan. Is the limited member’s share based on
the average age of retirement or the member’s actual age?

2.61 Actual or projected service?

We are using the average age of retirement to calculate the
limited member’s share, but not sure what service we are to use. Is it
the service that has accrued to the date that the limited member’s share
is being calculated? Or is it projected service to the average age of
retirement? In the case we have, if we use the actual accrued service,
the pension would be reduced to reflect early retirement. If the spouse
waits for another two years, however, there would be no
reduction.

2.62 Bridging benefits

Is a limited member entitled to a share of bridging
benefits?

2.63 Limited member doesn’t provide
instructions or plan can’t locate limited member

We have a situation where the former spouse is a limited
member who has not yet received a share of the benefits. The member has
now decided to have the pension commence. We have given the limited
member 30 days’ notice before implementing the member’s decision, but
the limited member has not given us directions concerning the limited
member’s share. We have another file with similar facts, except the
problem is that we cannot locate the limited member to give notice. What
happens to the limited member’s pension entitlement?

2.64 Elections: Limited member
remarries

Does the PBSA requirement—that a member who has a
spouse must take pension entitlement in the form of a joint and survivor
pension—apply to a limited member who has a spouse?

2.65 Indexing

If the spouse chooses to receive a separate pension when the
member reaches age 55, but the plan does not provide for indexing of
pensions until age 60, does indexing apply to the former spouse’s
separate pension when the spouse reaches age 60, or when the member
does?

2.66 Voluntary Contributions

If the member has made voluntary contributions to the plan,
how are these taken into account?

There is no requirement for the limited member to reach the specified
age. If the earliest that a pension may commence under the plan is 55,
and the member has reached that age, the limited member may choose to
receive a separate pension even if years younger.

The monthly amount payable to the limited member, however, will be
adjusted having regard to the limited member’s age, so that the plan
will not end up paying more than if the benefits had not been divided
(as specified under Reg., ss 23
and 24).

Yes, if the average age of retirement for the plan is before the age
at which there is entitlement to unreduced benefits. In most cases, the
average age of retirement for the plan will probably be at or after the
unreduced age. If service determines whether there is a reduction at the
average age of retirement, then this question would be determined based
on service accrued to the date of calculation: see para 2.59.
Some administrators have chosen to continue to use the optimal age
rather than the average age of retirement, in which case it is quite
likely that an early retirement factor will continue to apply in the
circumstances.

If, in the circumstances, there will be a reduction, it is open to
the limited member to choose to postpone the application to receive a
separate pension until a later date.

Whether the limited member would be better off taking the share right
away or waiting until a date after which no reduction would be made, is
a question that the plan may be in a position to advise about. Or, if
not, the plan administrator may be able to provide the limited member
with information about the issue and

2.69 How does reducing the member’s pension
entitlement affect eligibility for benefits?

After the limited member receives the lump sum transfer, or
the separate pension, we are supposed to reduce the member’s pension
entitlement by deducting pensionable service (under Reg., s
21). How does that affect other eligibility issues (such as qualifying
for an unreduced pension, or where the plan text determines survivor
benefits based on minimum levels of pensionable service)?

2.70 Using the optimal age instead of the
“average age of retirement”

Our preference would be to continue as under the FRA
and calculate the former spouse’s share by reference to the optimal age
(the age that places the highest value on the benefits), rather than the
average age of retirement. Is that permitted?

2.71 Members required to pay increased
contributions

To maintain benefits, our plan was amended to require members
to pay substantially increased contributions. The limited member’s share
of the benefits relates to the period before the increased
contributions, but the way the FLA works, the limited member’s
proportionate share applies to all of the benefits at the date of
division, so will include some portion of the period that relates to the
increased contributions. Does this increase in contributions require any
adjustment to the limited member’s share?

2.72 Members can elect to pay increased
contributions

Our plan gives members a choice to participate in two
different plans, one that provides benefits based on 1% final average
earnings, the other based on 2% final average earnings. The contribution
rates are higher for the second plan. The member wants to switch to the
2% final average earnings plan, but the member’s former spouse is a
limited member of the plan. How would this switch affect the limited
member’s entitlement?

2.73 Early retirement and projections

The limited member has decided to receive a separate pension,
and the member is some years from the average age of retirement. It
seems

No. Reg.,
s 23(4)(ii) provides that the limited member’s entitlement is based
only on the benefits accrued to the valuation date. (In this context,
the valuation date is the end of the month immediately preceding the
commencement date of the separate pension: Reg., s
23(3)(a)).

Yes, limited members have essentially the same rights as members.
See paras 2.1 and 2.2.

There is no real conflict in any of these circumstances.

Filing by member: In fact, both the FLA and the
federal PBSA permit the member to file the required Forms. [FLA,
s 113(2); federal
PBSA, s 25(5)]

2.76 Target benefit plan

How are benefits in a target benefit plan
divided?

2.77 Target benefit provision: temporary
improvement in benefits

We administer a target benefit plan. The limited member chose
to receive the share of the benefits by a separate pension. We have
amended our plan to provide for a temporary improvement in benefits for
retired members under PBSA, s 21. How does this affect the
entitlement of the limited member under the separate pension? What about
the entitlement of former limited members who received their share by a
lump sum transfer from the plan?

2.78 Defined benefit provision and target
benefit provision

The definition of “defined benefit provision” in
FLA, s 110 expressly does not include a “target benefit
provision”. What is the significance of that exclusion? Does it mean
that benefits in a target benefit plan are divided differently from
benefits in a defined benefit plan?

It is not possible to provide any tax advice in this publication and
if tax issues arise, qualified professionals should be consulted.
However, as a general principle, the Income Tax Act
accommodates transfers from registered pension plans to other registered
pension plans, or registered savings or income plans, because of a
breakdown of a marriage or common-law partnership. [See ITA
Form T2151; ITA, s 147.3(5)]

It is a good idea to ask both the plan administrator making the
transfer and the financial institution accepting the transfer (or plan
administrator if it is a plan- to-plan transfer) to confirm the forms
they require.

[See para 1.9, and Chapter 1 generally]

[See Chapter 14]

A defined contribution account is like a bank account or an RRSP. Any
future changes in its value will be because more contributions are made
to it (and from investment returns), so it is relatively straightforward
to divide the account balance immediately between the parties.

(In contrast, when benefits are determined by a benefit formula
provision, their value increases by other factors that usually cannot be
fully assessed until a future date. For that reason, benefits determined
by a benefit formula provision are divided on a deferred basis, until
those factors, or more of them, are known, as described in Chapter
2).

The former spouse is entitled to a share of the account balance that
accrued during the parties’ relationship. The actual period is
determined by dates specified in the agreement or court order for the
beginning of the relationship (the “commencement date”) and the end of
the relationship (the “entitlement date”) [See para 2.24, and
Reg.,
s 1(1) definition of “commencement date” and “entitlement date” and
Reg.,
s 20]

The Division of Pensions Regulation provides for determining
the former spouse’s proportionate share of a defined contribution
account by the formula:

transfer amount = ½ (account balance – pre-relationship
contributions)

The “account balance” is the value of the account at the former
spouse’s entitlement date, plus investment returns up to the date the
former spouse’s share is transferred. The entitlement date will usually
be the date of separation, but the parties can agree upon, and the court
can direct, that a different date be used.

Yes.

The definition of “investment returns” expressly provides that
“related investment expenses” are deducted from proceeds realized from
investing contributions. Commission expenses are normal investment
expenses taken into account when calculating net returns on an
investment. [Reg.,
s 1(1)]

The policy adopted under Part 6 is that employer contributions not
vested by the date of division are not divided between the spouses.

Reg.,
s 9 divides “contributions to the plan to the credit of the member”.
Until they are vested, contributions to the plan are not credited to the
member because, if they do not vest, the member will never become
entitled to them. The PBSA introduced immediate vesting
effective September 30, 2015.

Immediate vesting means that a plan member is entitled to receive any
benefit earned from the time the member joined the plan (for all service
accrued after January 1, 1993, the date when pension benefits
legislation was first enacted in B.C).

The FLA rules relating to contributions that are not yet
vested, however, would still apply to plans that are not subject to
B.C.’s PBSA. Where the unvested contributions are sizeable, a
spouse may seek to divide the benefits by a compensation payment from
the member. [FLA,
s 97] Under the Division of Pensions Regulation, s
27(4), a spouse may choose to either (a) postpone valuation of a
compensation payment until it is determined whether unvested entitlement
vests, or (b) have the valuation proceed “assuming the entitlement will
vest, but adjusting it to take into account the contingency that the
member may die or leave employment before vesting”.

3.7 Record keeping: pre-relationship
value

What does the administrator do if it does not know the value
of a defined contribution account at the “commencement date” and
therefore cannot calculate the “pre-relationship
contributions”?

3.8 Are daily records required?

Is the administrator of a defined contribution account now
required to keep records that allow it to pinpoint the value of any
member’s benefits on a daily basis to establish the pre-relationship
contributions?

To discharge the obligations imposed on plan administrators with
respect to pension division means that in some cases records must be
retained indefinitely. However, where other legislation specifies record
retention periods, then there will be cases where plan administrators
will have to estimate benefits based on the information that is
available. For example, PBSA,
s 34 requires plan administrators to retain plan records, in Canada,
in accordance with the superintendent’s requirements, which have been
issued as a guideline. See Records Retention
Guideline (Pensions) Administrators of BC Registered Pension Plans,
issued September 2017.

No. There is no requirement on a plan to retain records for members
that earn pension entitlement outside of B.C. The pre-relationship
contributions would have to be estimated on a pro-rata basis.
[See para 3.7]

The B.C. PBSA provides that all pension benefits earned are
“locked-in” (that is, must be used to produce life income at a later
date: see para 10.4). [PBSA,
s 68] This rule applies equally to a share of the benefits received
by a former spouse when a relationship ends.

(Immediate locking-in of a member’s benefits represents a change to
the former position, which provided that benefits vested after 2 years
of continuous plan membership. The new locking-in rule applies to all
benefits earned after January 1, 1993, the date that pension benefits
standards legislation was first enacted in B.C.)

Different locking-in rules apply depending on the legislation
governing the plan. Federal rules differ from provincial rules. Make
sure you know which rules apply. See further Chapter 10,
particularly para 10.5.

There are a number of situations in which locked-in benefits can be
unlocked, and the B.C. unlocking rules would apply equally to pension
benefits in the hands of a former spouse. [PBSA,
s 69] One of these situations is that pension benefits that are less
than a prescribed amount can be unlocked.

3.12 Pre and Post Jan. 1993
Contributions

Part of the member’s benefits consists of pre-1993
contributions that are not locked-in. The spouse would like the transfer
to be on a non-locked-in basis. Can the spouse choose to have the
spouse’s share paid only from the pre-1993 contributions?

3.13 Plan has 2 separate components

The member has terminated employment and has decided to keep
the benefits in the plan and make regular Life Income Type Benefit
(“LITB”) withdrawals. The LITB account consists of two different parts,
one of which is locked-in and the other not. Can the agreement or court
order divide

If the plan consists of two or more different components, the parties
may use different approaches for quantifying the former spouse’s
proportionate share of each component of a plan. See also para
3.12 and 5.22.

[See Chapter 10]

Yes, if the administrator consents. [FLA,
s 114(2)(b)] You would have to file a Form P2 to become a limited
member of the plan, and your share would be administered “subject to the
same terms and conditions that apply to members”. The usual maximum
administrative fee for a transfer from a defined contribution account is
$200. But if the former spouse becomes a limited member of the plan
instead, the maximum fee increases to $1000.

No, the former spouse would not be entitled to a share of the
withdrawals made by the member. The former spouse would still receive
the share of the defined contribution account by a transfer from the
plan. The rules for dividing defined contribution accounts continue to
apply so long as there are funds in the account, even after a member
begins making withdrawals from the account. [FLA,
s 114(1)(b)]

3.17 Terms for dividing variable
benefits

The member has terminated employment and has decided to keep
the benefits in the plan and make regular Life Income Type Benefit
(“LITB”) withdrawals. What information needs to be in the agreement or
court order to divide these benefits?

3.18 Allocating withdrawals to the LITB
account

The member has terminated employment and has decided to keep
the benefits in the plan and make regular Life Income Type Benefit
(“LITB”) withdrawals. We have received an agreement dividing the account
with a former spouse where the entitlement date is a couple of years
ago, and in the meantime the member has made regular withdrawals from
the account. How do we allocate those withdrawals? Do they come from the
member’s share? Or should they be applied pro rata to both parties’
shares?

3.19 Not enough funds in LITB account to pay
out former spouse’s share

The member has terminated employment and has decided to keep
the benefits in the plan and make regular Life Income Type Benefit
(“LITB”) withdrawals. The withdrawals have reduced the account balance
to an amount less than required to satisfy the former spouse’s share.
What happens in that case?

3.20 Variable benefits

The member has terminated employment and has decided to keep
the benefits in the plan and make regular Life Income Type Benefit
(“LITB”) withdrawals. The former spouse has now received the required
share of the account. How does this impact the member’s annual
withdrawal limits?

The plan should leave the current limits (ITA minimum and
PBSA maximum) in place until the following year when they would
be updated as part of normal process.

See para 2.22.

The FLA applies to the division of benefits in a pooled
registered pension plan account. [FLA,
s 110, definition of “local plan”]

A PRPP is a type of plan in which benefits are determined under a
defined contribution provision, so the benefits would be divisible under
FLA,
s 114 (and in accordance with the principles discussed in this
Chapter).

Transfers from the account would be to another pooled registered
pension plan, to a pension plan, if that plan administrator permits, to
a locked-in savings or income plan, or used to purchase an immediate or
deferred life annuity. (For BC members, the transfer would be to a
federally regulated locked-in savings or income plans, although these
plans are subject to the usual creditor protection rules that apply
under provincial pension standards legislation to all provincial
locked-in savings and income plans.)

For more information regarding the rules for PRPPs refer to the
governing legislation. [Pooled
Registered Pension Plans Act, SBC 2014, c 17; Pooled
Registered Pension Plans Act, SC 2012, c 16]

Also, information for B.C. members is available on the website of the
federal Office of the Superintendent of Financial Institutions. In 2018,
OSFI published a Member Guide for each participating Jurisdiction. BC’s
is here https://www.osfi-bsif.gc.ca/en/supervision/pensions/administering-pension-plans/guidance-topic/pooled-registered-pension-plans-guide-british-columbia-members

[See para 1.9 and Chapter 1 generally]

[See Chapter 14]

Yes. This is expressly permitted under Part 6. [FLA,
s 116(2)(b)]

Yes, the rules under FLA,
s 116 that apply to hybrid plans would govern the division of the
benefits. The defined contribution account would be divided by an
immediate transfer to, for example, a LIRA or LIF for the former spouse
[PBSA, s 88] (subject to the option discussed under para 4.3
and 4.5), and the former spouse would become a limited member with
respect to the benefits determined under the benefit formula provision.
[See Chapter 10 for more information about transfers from a
plan.]

The administrator can charge up to $200 for the transfer from the
defined contribution account and up to $1000 for registering the former
spouse as a limited member. [Reg.,
s 28]

In this case, you are doing both: dividing the defined contribution
account between the parties, and the former spouse is becoming a limited
member of the plan. So the maximum that could be charged is $200 plus
$1000, or $1200.

Yes, this meets the definition of “hybrid plan” in FLA,
s 110. It is not possible to provide advice on this point without
more information, but the guiding policy is that all aspects of the
benefits must be shared. It would not be consistent with the
requirements of the FLA to base the former spouse’s share just
on the defined contribution account if there is value in the minimum
benefit provision.

Benefits under a plan mature when a member begins to receive the
pension. [See para 2.59]

Technically, if a member is making Life Income Type Benefit (“LITB”)
withdrawals from a defined contribution account (sometimes referred to
as receiving a “variable pension” or “variable benefits”) this would
qualify as a matured pension. But the rules that apply to matured
pensions do not apply if the benefits remain in a defined contribution
account, because they can still be directly divided with the former
spouse without prejudicing third parties. [FLA,
s 114(1)] See para 3.16.

[See para 1.9 and Chapter 1 generally]

[See Chapter 14]

The policy under Part 6 balances the interests of the member, spouse
and plan. It is difficult to undo the pension arrangements that have
already been put in place: see para 5.7. For that reason, the
member and spouse must deal with the circumstances that exist when they
finally get around to finalizing their property arrangements:
see also para 5.15. It is certainly true that the rules that
apply before pension commencement usually provide the former spouse with
better financial security. But if the former spouse wants them to apply,
the former spouse must act before pension commencement, or make
arrangements to

5.5 When does a pension “terminate”?

Section 117(2) says the spouse gets a share of benefits
during the member’s lifetime until the earlier of the termination of
benefits under the plan or the death of the spouse. When do benefits
“terminate”?

5.6 The member has died and the LM is not the
joint annuitant

We have been paying a limited member a share of the member’s
matured pension. The member has now died and there is a 60% survivor
benefit payable to the member’s current spouse. The agreement provides
that the limited member is entitled to continue receiving the pro rata
share, but s

This is an unusual situation. See para 5.10 for
circumstances in which this type of arrangement might arise.

The FLA rules fill in gaps, where the pension division
arrangements have not addressed particular issues. It is open to the
parties, or the court, however, to provide directions in many of these
cases. [FLA,
s 111(1)]

If the pension division arrangements were finalized after the pension
matured, then continued division with the limited member would
require:

1. if an agreement is used, that the joint annuitant be a party to
   the agreement, or

2. if in a court order, that the joint annuitant be a party to the
   proceedings.

Otherwise, the agreement or court order could not affect the rights
of the joint annuitant.

For example: the member’s pension pays $1000 per month. The
limited member is entitled to 1/5 of benefits paid under the pension.
The limited member is the joint annuitant. The survivor benefit reduces
the monthly payment to 60% on the death of the member.

While both member and limited member are alive, the member receives
$800/mo. The limited member receives $200/mo.

If the member dies first, the limited member becomes entitled to the
whole of the survivor benefit: $600/mo. [FLA,
s 124(5)]

Why does the legislation adopt a policy that increases the limited
member’s entitlement after the member dies? For these reasons:

1) any other approach would require opening up the pension and
setting aside elections already made. Some, but not all, administrators
would be

5.8 Can the survivorship election be
changed?

The member married shortly before pension commencement. As
the PBSA required, the member took the pension with a 60%
survivor benefit. The spouse and member have now split up. Can the
member change the survivorship election?

5.9 Spouse1 v Spouse2

How does the benefit split of a matured pension work where
spouse2 is entitled to a proportionate share of the pension, but spouse1
is the joint annuitant?