In 1979, the British Columbia Family Relations Act (“FRA”) was enacted. It provided that pensions were family assets that were divisible between spouses when their relationship ended, but detailed rules for dividing pension benefits were not available until 1995, when Part 6 of the FRA was enacted. Those rules provided for the assistance of plan administrators in dividing pension entitlement on the breakdown of a relationship. Although many parts of thatlegislation have been restated (and revised) in Part 6 of the Family Law Act (“FLA”), the outlines of pension division have remained very familiar to those having experience under the FRA.
Revisions to Part 6 were included in the Family Law Amendment Act, 2023. These revisions, along with amendments to the Division of Pensions Regulation, were brought into force on 1 January 2025.
PLANS SUBJECT TO B.C. LEGISLATION
The FLA applies to “local plans”. The general rule of thumb is that any private occupational plan, including one that is federally regulated, qualifies as a local plan to the extent that it hasmembers that accrue pension entitlement while working in British Columbia. B.C. public sector plans are also expressly included [See Table 1 in this Chapter. For the rules that apply to plansthat do not come within the definition of “local plans” (called “extraprovincial plans”) see Chapter 7.]
OVERVIEW OF B.C.’S PENSION DIVISION RULES
The rules for pension division make distinctions for dividing benefits depending upon whether or not (1) the plan is a local plan; (2) the pension has commenced at the time the pension division arrangements are finalized, and (3) the kind of plan. (The rules are set out in a convenient table—see Table 2 below in this Chapter.)
TYPES OF PLANS
Pension plans take one of two basic forms. If benefits are determined by a formula (such as1.5% x pensionable service x highest average earnings), this is referred to as a “benefit formulaprovision”. Such plan designs include defined benefit and target benefit provision. [SN1] Ifbenefits are determined by contributions and investment returns, this is referred to as a “defined contribution provision”.
DIVIDING BENEFITS DETERMINED BY A BENEFIT FORMULA PROVISION
If the benefits are determined by a benefit formula provision and the pension has not commenced when the pension division arrangements are finalized, division is deferred until the member is eligible to have the pension commence. The spouse is designated a “limited member” of the plan. After the member is eligible under the terms of the plan to have the pension commence (usually at age 55, but this is a plan-determined rule that should be checked in every case), the limited member may choose between receiving a specified share of the benefits by either (a) a separate pension payable for the limited member’s lifetime, or (b) atransfer of the commuted value of the limited member’s share from the plan, so long as that option is available to the plan member. (Depending on the circumstances, the transfer of locked-in funds may be made to a LIRA, a LIF, another pension plan, another account in the same pension plan or used to purchase an annuity). [See Chapter 2] [See Chapter 10 for more information about transfers from a plan.] However, if the member terminates plan participation and elects to transfer their share of benefits out of the plan, the limited member must do so as well, unless the plan administrator agrees to permit the limited member’s share to remain in the plan or the limited member has commenced their separate lifetime pension when the member makes their transfer election.
DIVIDING BENEFITS DETERMINED BY A DEFINED CONTRIBUTION PROVISION
If the benefits are in a defined contribution account, division takes place immediately. The administrator transfers half of the portion of the benefits acquired during the relationship (plus net investment returns on that portion) from the plan (in the case of locked-in funds, to a LIRA,a LIF or another pension plan) for the spouse. In some cases, the former spouse can become alimited member and keep the benefits in the plan. [See Chapter 3] [See Chapter 10 for more information about transfers from a plan.] Lump sum transfers may involve a portion that is transferred on a non-locked-in basis as cash or to the recipient’s RRSP.
These rules apply equally to benefits in a pooled registered pension plan, which is a type of plan in which benefits are determined by a defined contribution provision. [Pooled RegisteredPension Plans Act, SBC 2014, c 17; Pooled Registered Pension Plans Act, SBC 2012, c 16]
IF THE PENSION HAS COMMENCED
If the member’s pension has commenced, the pension is said to be “matured”. The pension division rules change if the pension division arrangements are not finalized until after the pension has commenced. Instead of the former spouse receiving a separate share of the pension entitlement, the only option available is to divide the income stream between the parties. Notably, in the context of a commenced pension, the pension division does not alter the form of pension (e.g., joint and survivor) elected by the member at pension commencement. [See Chapter 5] The former spouse must become a limited member of the plan, and the administrator will be required to divide each monthly payment, make separate tax withholdings for member and spouse, and pay each of them their respective shares separately. The limitedmember will receive a share of the pension until the earliest of the death of the limited member, the member or the termination of the pension.
ANNUITIES
Part 6 applies to annuities that are purchased by a plan administrator on behalf of a member and annuities purchased privately by a spouse if the spouse is receiving payments under the annuity. In these cases, unless an agreement or order provides otherwise, the annuity is divided in the same way as a pension that has commenced. [See Chapter 5 for more information.] If a spouse purchases an annuity privately and is not receiving payments under it, then the annuity will be divided pursuant to Part 5.[SN2] [GU3]
LIRAs/LIFs
The BCLI Report on Pension Division: A Review of Part 6 of the FLA proposed that LIRAs and LIFs, which have historically been divided under Part 5, should instead be divided under Part 6. The funds in these accounts are comprised of benefits transferred on a locked-in basis from a pension plan. LIRA and LIF accounts have similarities with pension benefits that support the application of Part 6 rules.
The Family Law Amendment Act, 2023 implemented this policy change into the FLA, such that RRSPs (with no locked-in pension money) remain family property divisible under Part 5 of the FLA [FLA, s 84(2)(e)]; however, Part 6 now applies to benefits in LIRAs and LIFs.
See [Section 1.18] below for additional commentary on LIRA/LIF division under Part 6.
FORMS
Part 6 sets out Forms to be used in communications between the member, the former spouseand the plan administrator. The administrator will take the appropriate steps to divide the benefits once the plan receives the correct Forms, together with the order or agreement that provides that the spouse is entitled to a share of the benefits. [See Chapters 13 and 15]
The B.C. legislation is set out in Appendix A. The Division of Pensions Regulation is in Appendix B. Checklists of information for plan administrators are in Appendix c Checklists for lawyers are in Appendix D.
For more information about B.C. pension division legislation, consult:
- Family Law Agreements—Annotated Precedents (a publication of Continuing Legal Education Society of British Columbia)
- Family Law Sourcebook (a publication of Continuing Legal Education Society of British Columbia)
- Report on Pension Division on Marriage Breakdown, A Ten Year Review of Part 6 of the Family Relations Act (British Columbia Law Institute Report No. 44, May 2006)
- Report on Pension Division: A Review of Part 6 of the Family Law Act, (British Columbia Law Institute Report No. 91, March 2021).
- Course Materials, Pension Division on Relationship Breakdown 2023 (Continuing Legal Education Society of British Columbia)
| 1.1 Spousedefined | Does “spouse” in Part 6 of the FLA include unmarried persons in marriage- like relationships? Yes. [FLA, s 3] Family property, including benefits under pension plans, are divisible between legally married spouses and spouses who have lived in a marriage-like relationship of at least 2 years. See para 13.22-23 and 13.26. (This was not the case under the FRA. Under the FRA, unmarried spouses were not automatically entitled to a share of pension benefits, but only if the parties agreed to divide them, or entitlement could be established based on principles of unjust enrichment: see para 1.1 of the 2001 Q&A). |
| 1.2 Spousedefined (2) | Does “spouse” in Part 6 of the FLA include someone who is separated or divorced from their partner? |
| Yes, a “spouse” includes a “former spouse”. [FLA, s 3(2)] | |
| 1.3 Can anannuity be divided between the parties? | If the pension is being provided through an annuity purchased from an insurance company, does Part 6 apply? |
| Yes, an immediate or a deferred annuity purchased by a plan administrator from an insurance company to cover its obligations to the member would be divisible under Part 6 (FLA, s 118.1 (3)), as would an annuity purchased by a spouse if the spouse is receiving payments under the annuity. (FLA, s 118.1(2)) [SN1] [GU2] The insurancecompany would be considered to be the administrator. [FLA, s 110, definition of“administrator”] See Chapter 5 and para 5.18. |
| 1.4 Need forprofessional advice? | Do my spouse and I need to consult a lawyer, actuary or other professional to divide the benefits? |
| There is no requirement to involve professionals. All that is really needed is a very simple agreement made between former spouses, that:contains sufficient information to identify the plan or respecting the employment under which the member accrued the benefits,provides that the benefits are to be divided between the parties (it helps to referto Part 6, but Part 6 will apply even if not specifically referred to in the agreement), and(c) 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 ofPensions 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 yourdecisions may be considerable. As with any complicated area of the law, if you do notconsult 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 [SN3] [GU4] 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 [SN5] [GU6] actuary(i.e., an actuary that is not working on behalf of the pension plan at issue) can tell you how muchthe benefits are worth—note that a pension plan’s actuary is typically unable to provide members or spouses with actuarial estimates.[SN7] [GU8] 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 theformer spouse keeps other assets, such as the family residence. | |
| 1.5 Need for aplanamendment? | Is a plan amendment required for an administrator to be able to divide pension entitlement? |
| No. Pension plans registered in B.C. are governed by the Pension Benefits StandardsAct, SBC 2012, c 30 (the “PBSA”) and the Pension Benefits Standards Regulation, BCReg 71/2015. |
| The required provisions for pension plans are specified in Part 3 of the PBSA. There is no requirement in the PBSA for a plan to contain provisions with respect to the division ofpension benefits upon the breakdown of a relationship. But a plan must not contain anything in derogation of the provisions of the PBSA or the FLA with respect to the division of pension benefits. The PBSA expressly provides that benefits under a pension plan are subject to an order or agreement made under Part 6 of the FLA (PBSA, s 77). The PBSA also provides that the prohibition against assigning or charging benefits does not apply to an agreement or court order dividing benefits because of the breakdown of a relationship (PBSA, s 70(3)(c)).[See, however, para 5.14] | |
| 1.6 Mustagreement or order specificallysay benefits are beingdivided? | 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? |
| Yes. FLA, s 134 requires that an agreement or order must be sent to the administrator inorder to divide the benefits. Note that prescribed Form P9 meets the requirement for an agreement or order. And FLA, s 111(2) provides that if an order or agreement representing a final property settlement is silent about entitlement to benefits, thebenefits are deemed to be allocated to the member. [See para 6.15, 11.17 and 14.14 forthe general rule, and para 13.24 for what the court can do if the agreement is silent about the pension entitlement.] | |
| 1.7 Will Part 6 apply inevery case? | If benefits are to be divided, does it have to be in accordance with Part 6? |
| No.In every case, an option open to the member and spouse is for them to agree to a different division arrangement (i.e., supplanting the default FLA proportionate share formula) or agree that the spouse will waive entitlement to benefits [FLA, s 127(1)(b)]. Usually the spouse’s waiver will be in exchange for a compensation payment, the transfer of another asset or the member waiving rights to an asset owned by the spouse.If the spouse waives entitlement, Part 6 becomes irrelevant, except with respect torules for valuing the compensation payment. [FLA, s 128, Reg., s 27] |
| Three situations where the spouse and member might consider satisfying the spouse’s share by a compensation payment or the spouse receiving other assets are: the spouse’s share of the pension benefits is very small (because of a short relationship or because the member has not earned very much entitlement);the member wants to keep the pension benefits, or the spouse wants to receive other assets instead (such as the family residence), and an overall equal division of assets can be achieved by dividing other property; orthe spouse has separate pension entitlement of similar value (or any difference in value between the parties’ benefits can be adjusted by a compensation payment).Determining an appropriate compensation payment can be quite complicated and often requires the assistance of an independent [SN9] [GU10] actuary (i.e., an actuary that is not working on behalf of the pension plan at issue).Also, the plan may offer additional methods of division. (This is quite common with plans regulated under the federal PBSA, for example, which frequently allow an immediate transfer of the spouse’s share of benefits even where that is not an option provided under Part 6.) If the parties have started the process of dividing pension benefits by sending documents and other Forms to the administrator but later decide not to divide the pension benefits: see para 15.45. | |
| 1.8 Referring toPart 6 | If Part 6 is to apply, does the order or agreement have to specifically refer to Part 6 of the FLA? |
| A well drafted agreement or order should specifically apply the FLA to the division, in part to aid the plan administrator in achieving clarity on how the division is to be administered. That said, provided the agreement or order clearly indicates the benefitsare to be divided, Part 6 will apply. Where the benefits are to be divided, Part 6 appliesunless the spouse and member otherwise agree, or a court makes a contrary order. [FLA, s 111(1). See para 11.3] | |
| 1.9 Local plans: does Part 6 of the FLAapply? | How do I find out if my spouse’s benefits are in a plan that is subject to Part 6 of the FLA? |
The easiest way is to check with the plan administrator, who should be able to confirm thisfor you. A Form P1 is typically required by a plan in order to provide information to a spouse or former spouse of a plan member. As well, many provincial pension regulators maintain publicly accessible online registries of registered pension plans. For example, the BC Financial Services Authority (“BCFSA”) [SN11] maintains an online list of all pension plans registered in British Columbia.
As a general overview of the principles that apply: Part 6 of the FLA provides rules fordividing benefits in any pension plan where the law of B.C. governs the division of family property on the breakdown of a relationship. The rules for plans that are subject to B.C. law(“local plans”) are different from those for plans that are subject to the law of another jurisdiction, referred to as “extraprovincial plans”. Extraprovincial plans are discussed at paras 1.13, 1.15 and in Chapter 7.
“Local plan” is a defined term. [FLA, s 110] Basically, a “local plan” is:
- any B.C. public sector plan, and
- any private sector plan registered in B.C. under the PBSA, or registered in another jurisdiction but the member earned pension entitlement while employed in B.C. (Aperson is deemed to be employed in the province where the employer has anestablishment to which the person is required to report for work: PBSA, s 1(7). See, however, PBSA, s 1(8), if the person is not required to work at the employer’s establishment.)
“Local plan” would also include any plan with members employed in B.C. (para (b) of the definition).
“Local plan,” also includes:
- a private sector plan registered under the federal Pension Benefits Standards Act, [see para 1.12] but does not include a federal public sector plan.
Federal Public Sector Plans—Federal Pension Benefits Division Act
Public sector pension benefits under the following federal statutes are divisible under the federal Pension Benefits Division Act and not under the FLA:
- 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 ActRoyal Canadian Mounted Police Pension Continuation Act· Royal Canadian Mounted Police Superannuation Act· Special Retirement Arrangements Act[SN12] An all-too-common error (sometimes even made by judges) is to assume that the Pension Benefits Division Act applies to all federally regulated plans. It does not. For example, the PBDA does not apply to the Canada Post Plan, nor the Air Canada Pension Plans. These are examples of federally regulated private occupational plans (as opposed to public sector plans). Another common error is for the agreement or order to purport to apply Part 6 of the FLA to divide benefits under federal public sector plans that are subject to the PBDA.[SN13] [GU14] If the benefits under federally regulated private occupational plans were earned through employment in B.C., they are subject to Part 6 of the FLA. | |
| 1.10 Workingin different provinces | The member earned pension entitlement under a single employer, but while working in a number of different provinces (as follows):Alberta: 1980-1995Saskatchewan: 1995-2000B.C.: 2000-2012What law governs the division of these benefits? Are these benefits in a “local plan”? |
| Usually, where a member accrues benefits under a single plan, but from employment in different provinces over a period of years, the applicable pension and family law will bedetermined by the province where the member was accruing benefits when the relationship ended.But, if a dispute arises, this fact pattern has the potential to produce very difficult legal questions, such as:which province’s courts have jurisdiction to hear the matter?which province’s laws determine entitlement to family property when a relationship ends?which province’s laws determine how to divide the benefits?[SN15] [GU16] Most of the provinces have adopted the same rule that applies under the B.C. PBSA for determining which province’s pension legislation applies. Even if the benefits havebeen earned in a number of different jurisdictions, the whole of the benefits |
are subject to the laws of the province where pension entitlement was last earned before the “event” (such as pension commencement, or the breakdown of a relationship) takes place. [PBSA, s 1(9)]
The rules for determining the applicable family law are different but often reach a similar result. Suppose, for example, that the member lives and works in Alberta and acquires benefits under a plan with members in Alberta and B.C. The member and the member’s spouse separate, and the member’s spouse moves to B.C. After living in B.C. for some years, the former spouse commences proceedings in B.C. for a divorce, support and a share offamily property, including the pension benefits. A B.C. court would have jurisdiction to hear the matter if the spouse is “habitually resident” in B.C. [FLA, s 106(2)(c)], and the plan would qualify as a “local plan” because of its B.C. members. [FLA, s 110, definition of“local plan” para (b)(ii), see para 1.9] But the B.C. court would not necessarily takejurisdiction over the matter unless it considered that there was a real and substantialconnection with B.C. Even if the B.C. court accepts jurisdiction, it would not automatically apply B.C. law. For movable property (also known as personal property), which would include pensions, the court would apply to the relationship the law of the jurisdiction where the parties last habitually resided together (in this case Alberta). And it would also determine entitlement to assets using Alberta law. [See para 1.16]
B.C. has signed the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans, along with the federal government and all provinces except Prince Edward Island (which does not have pension legislation). The 2020 Agreement [SN17] may affect the discussion above, but since it is such a recent development, its scope is yet to be explored. In the absence of the 2020 Agreement, plans with members in more than one jurisdiction would have to face thesupervisory and regulatory burden imposed by each jurisdiction’s legislation. The object of the 2020 Agreement is to specify the pension rules that apply to a multi-jurisdictional plan and provide for a single pension supervisory authority to exercise all of the supervisory and regulatory powers over that plan. Section 7 of the 2020 Agreement selects the applicable pension legislation for determining pension benefits by the pension legislation that applied:
- at the time the person’s benefits were determined, if the person was still accruing benefits under the plan at that time; or
- at the time the person ceased accruing benefits under the plan, if the person was no longer accruing benefits under the plan at the time the person’s benefits were determined.
While the 2020 Agreement provides rules for determining the applicable pension legislation,it does not specify which family property regime applies to multi-
| jurisdictional plans. Some jurisdictions set out the pension division rules in their pension legislation, so this may not be an issue in those jurisdictions. But B.C.’s pension division rules are in the FLA. An additional complication is that the remaining provincial jurisdiction—Prince Edward Island—remains subject to the 1968 Memorandum of Reciprocal Agreement. This is, therefore, an area where the legal principles are still in flux. | |
| 1.11Employment 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? |
| No. Part 6 applies to benefits in pension plans (and its main significance is that it requires the assistance of the plan administrator in dividing those pension bene- fits). Courts have held that various termination or severance benefits payable by an employer are divisible between the parties when the relationship ends (under Part 5). But assisting in the division of severance benefits, or other benefits payable on the termination of employment, that are not part of the pension plan, is not the responsibility of the plan administrator. [See Pensions and Benefits: Fundamentals of Pensions and Pension Division for Family Lawyers (B.C. Continuing Legal Education Society, 2011) at XXI, “Other Employment Benefits”] | |
| 1.12 FederalPBSA | If a B.C. member has benefits in a plan that is registered under the federalPension Benefits Standards Act, is it divisible under Part 6 of the FLA? |
| Yes, so long as the member worked in B.C. The federal PBSA incorporates provincialpension division legislation by reference. Sections 25(2) and (3) provide: 25.(2) Subject to subsections (4), (7) and (8), pension benefits, pension benefit credits and any other benefits under a pension plan are, on divorce, annulment,separation or breakdown of a common-law partnership, subject to the applicable provincial property law. |
(3) A pension benefit, pension benefit credit or other benefit under a pension plan that is subject to provincial property law pursuant to this section is not subject to theprovisions of this Act relating to the valuation or distribution of pension benefits, pension benefit credits or other benefits under a pension plan, as the case may be.
The reason the federal PBSA provides that provincial pension division law applies is because of Canada’s constitutional law, which carefully defines matters that are within federal jurisdiction and matters that are within provincial jurisdiction. Issues of “property and civil rights” are exclusively a provincial matter, and this category includes family law and, as such, the division of family property. The division of pension benefits between formerspouses when the relationship ends is therefore an issue of “property and civil rights”. Section 25(2) of the federal PBSA merely stipulates what Canadian constitutional law requires. Any other position would render this aspect of the federal PBSA unenforceable because it would be unconstitutional.
As a matter of constitutional law, the federal government has express legislative authority over federal undertakings. It is ancillary to that legislative authority to deal with related issues (such as pension benefits for employees working in the federally regulated undertakings). So the federal government has legislative authority to deal with these types of benefits. But it cannot use that legislative authority to override provincial jurisdiction.
Some have taken the position that if there is a conflict between the provisions of B.C. lawand federal law respecting pension division issues, the federal law necessarily prevails. This is incorrect.
If both jurisdictions are competent to legislate in the area in question, then often conflicts can be dealt with through the application of principles of “paramountcy”, which are much morenuanced than most people who are not constitutional experts expect. It is not simply a question of saying that one Act trumps another. It is an approach to constitutional law whichtypically allows provincial and federal law to co-exist unless something permitted under one set of laws is prohibited under the other.
Where there is some kind of unavoidable conflict, principles of paramountcy do not automatically provide that federal law outweighs provincial law. That question is determined by the constitutional arrangements allocating how powers were allocated between the federal and provincial governments.
To the extent that there is an operational conflict between federal and provincial legislation on a question of pension division where the provisions cannot co-exist, it is possible that federal legislation would be found to govern based on principles of paramountcy, but this question does not need to be addressed because the federal PBSA expressly says that provincial pension division law governs.
Provincial competence in this sphere extends to both legislation and regulations pertaining to pension division on the breakdown of a relationship. Any administrator, for example, that ignores the obligations imposed by a Form P1 on the basis that it is a regulatory provision is incurring substantial risk. Also, the whole point of B.C.’s Forms is to reduce the administrator’s exposure to risk and liability, so declining to use them based on arguments of paramountcy, even if legitimate, would not be a sensible practice.
Some administrators of federally regulated plans historically took the position that they were free to ignore provincial law as it applies to pension division issues, but they have lost everycase in which this issue has been raised. The federal Superintendent of Pensions (OSFI) has confirmed that provincial law applies to federally regulated occupational plans for dividing benefits when a relationship ends and confirmed that the plan must administer an agreement or order that divides the benefits in accordance with provincial property law. [InfoPensions Issue 13, May 20, 2015]
Federal public sector plans, in contrast, do not qualify as “local plans”. They are divisible instead under the federal Pension Benefits Division Act. [See para 1.9 and Table 2]
| Some plans regulated under the federal PBSA have taken the position that there is no legal obligation on them to assist in the division of pension benefits if the member’s pension commenced before the current federal PBSA was enacted (in 1987) finally allowing for pension division. But in Robertson v Canadian National Railway et al., 2000 BCSC 1171 it was held that even if:the member’s pension commenced,the relationship ended, and the parties made a separation agreement requiring the member to pay a portion of each monthly pension received from the federally regulated pension to the former spouse,before the current federal PBSA came into force, the terms of the pension division are enforceable against the plan administrator. See also para 7.5. | ||
| 1.13 Extra-provincial Plans | What is an example of an extraprovincial plan? | |
| A plan registered outside the province in which the member earned all pension entitlement in employment outside the province is an “extraprovincial plan”. It is important to note that whether a plan is “extraprovincial” or “local” is an assessment done from the perspective of the member at issue: i.e., a plan is not an “extraprovincial plan” for all members. A plan that has members in multiple provinces will be a local plan in the case of a member that worked in BC, and the same plan will be an “extraprovincial plan” from the perspective of a member that worked in Alberta while earning the pension. | ||
| 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., 2003BCCA 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)] [SN18] 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] | ||
| 1.14 A planregisteredin another province | My spouse is working in B.C. and is earning pension benefits, but the plan is registered in Quebec. Is it a “local plan”? | |
| Yes, because the member is earning benefits from employment in B.C. | ||
| 1.15 A planregisteredin the U.S. | My spouse earned pension benefits working in B.C., but the plan is registered in the United States. Is it a “local plan”? |
| 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. | |
| 1.16 B.C. planwith non-B.C. members | What about plans registered in B.C. that have members employed outside B.C.? Does the legislation apply to them? |
| 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. | |
| 1.17 Pre-March18,2013arrangements | Does the FLA apply to an agreement or court order made before the FLA came into force? |
| [See Chapter 14] | |
| 1.18 Incometax andpension division | What are the income tax consequences of dividing benefits under Part 6? |
The law in B.C. has recently changed regarding the divisibility of LIRAs under the FLA. The BCLI Report on Pension Division: A Review of Part 6 of the FLA proposed that LIRAs, which have historically been divided under Part 5, should instead be divided under Part 6. The funds in these accounts are comprised of benefits transferred on a locked-in basis from a pension plan. LIRA accounts have similarities with pension benefits that support the application of Part 6 rules.
The Family Law Amendment Act, 2023 implemented this policy change into the FLA, such that RRSPs (with no locked-in pension money) remain family property divisible under Part5 of the FLA. [FLA, s 84(2)(e)]; however, Part 6now applies to benefits in LIRAs.
RRSPs and RIFs are Divisible Under Part 5 of the FLA
Although Part 6 doesn’t apply to RRSPs and RIFs, this presents no practical problem for dividing benefits in this type of retirement account under a separation agreement or court order.
The Income Tax Act accommodates transfers from RRSPs. [See ITA Form T2220 ITA at ss 146(16)(b) and 146.3(14). For transfers from a registered pension plan to registered savings or income plan, see para 2.80]
LIRAs and LIFs are Divisible under Part 6 of the FLA
LIRAs and LIFs have been added to Part 6 as defined terms, and new FLA s 117.1 sets out the new LIRA and LIF Part 6 division rules. The new rules are of particular importance to parties wishing to divide LIRAs or LIFs and to the financial institutions that are the issuers of such assets that will be responsible for administering the division.
The core feature of the new rules is that the spouse of the LIRA or LIF account holder is now entitled to a proportionate share of the account. If the pension plan provision under which the LIRA or LIF benefits originate was a benefit formula provision (defined benefit or target benefit), the Part 6 benefit formula proportionate share calculation applies (s 17 of the Division of Pensions Regulation). Similarly, if the LIRA or LIF benefits originated in a defined contribution account, the Part 6 DC proportionate share calculation applies (s 20 of the Division of Pensions Regulation). The same is true if the origination plan was a hybrid plan.
Since the proportionate share calculations require a temporal component—the period of time that the member participated in the pension plan and earned the benefit before the pension value was transferred to a LIRA or LIF—it follows that parties will be required to provide the LIRA or LIF issuer with accurate plan member statements confirming the dates of the member’s participation in the pension plan.
| 1.20Valuation date | What valuation date is used for dividing benefits in an RRSP or a RRIF? |
| 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., 2015BCSC 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. | |
| 1.21 OldAgeSecurity | What rules apply to the division of Old Age Security benefits? |
| 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 spouseunder 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 hasreferred 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 ofdividing 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. |
Table 1: Is the Plan a Local Plan? (S 110, definition of “local plan”)
| Is the plan established by the province of B.C.?————————- > | Yes: Plan is a local plan |
| || No.V | |
| Is the plan registered under the B.C.PBSA————————————— > | Yes: Plan is a local plan |
| || No.V | |
| Is the plan registered in another province and the member acquired pension entitlement while working in B.C.?—————————————– > | Yes: Plan is a local plan |
| || No.V | |
| Is the plan subject to the federal Pension Benefit Standards Act and the member acquired pension entitlement while working in B.C.?– > | Yes: Plan is a local plan |
| || No.V | |
| Is the plan otherwise subject to Part 6 of the FLA (by the terms of the plan, legislation, or agreement)?———— > | Yes: Plan is a local plan |
| || No.V | |
| Plan is an extraprovincial plan |
If any question is answered “Yes,” the plan is a “local plan.”
If every question is answered “No,” the plan is an “extraprovincial plan.”
Table 2: Summary of Canadian Pension Division Legislation
| Kind of Plan | Governing Legislation | Method of Division |
| Pension in a federal public sector plan,for example a plan under theCanadian Forces Superannuation ActDefense Services Pension Continuation Act· Diplomatic Service (Special) Superannuation Act· Governor General’s Act· Lieutenant Governors Superannuation Act· Members of Parliament Retiring Allowances ActPublic Service Superannuation ActRoyal Canadian Mounted Police Pension Continuation ActRoyal Canadian Mounted Police Superannuation ActSpecial Retirement Arrangements Act | Pension Benefits Division Act, SC 1992, c 46 | The spouse is entitled to a share of the commuted value of the benefitsthat accrued during cohabitation (unless another period is specifiedby court order). This share would be transferred tothe 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 federally regulated privateoccupational plan where entitlement is earned from employment in B.C. | Federal Pension Benefits Standards Act, s 25. Family Law Act (B.C.) | See Table 1: Is the Plan a Local Plan? |
| Benefits in a provincially regulated plan (onethat 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 familyproperty when a relationship ends) | See Table 1: Is the Plan a LocalPlan? |
| Benefits under the Canada Pension Plan | Canada Pension Plan Act | Unadjusted pensionableearnings accruing duringcohabitation are equalized. |
| 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. |
Table 3: B.C. Pension Division Methods
| Kind of plan | Method of division if benefits are not yet being paid | Method of division if benefits are being paid |
| Benefits Determined by Benefit FormulaProvision (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(a) 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(b) 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 Defined Contribution Account (including LIRA and LIF benefits transferred from a defined contribution account) | The spouse is entitled to half of the defined contribution account, LIRA benefit or LIF benefit earned during the relationship (plus net investment returns on that portion).The spouse’s share is transferred to a LIRA, RRIF, LIF, annuity or anotherpension plan [PBSA, s88]If the administrator consents, the spouse’s share of a defined contribution account is transferred to another account in the plan, the spouse must become a limited member of the plan. (see Chapter 3) | If the benefits remain in the defined contribution account, the spouse receives a share of the account by the same rules thatapply before pension commencement.If the funds in the defined contribution account have been used to purchase an annuity for the member, the spouse becomes a“limited member” and receives a share of each monthly payment under the annuity.(see Chapter 5) |
| Benefits inSupplemental 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) |
British Columbia Law Institute 3
| Kind of plan | Method of division if benefits are Not yet being paid | Method of division if benefits are being paid |
| Other options are available withadministrator consent.(see Chapter 6) | ||
| Benefits in Individual 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.Other options are available withadministrator consent. (see Chapter 6) | The spouse becomes a “limited member” of the plan and receives a share of each monthly payment from the plan.(see Chapter 5 and 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) | |
| Annuity[SN19] | If the annuity was purchased by the plan administrator, then the spouse receives a share of each monthly payment made to the member once such payments commence[SN20] . (see Chapter 5) If the annuity was purchased by a spouse privately, then it will be divided pursuant to Part 5. | The spouse receives a share of each monthly payment made to the member regardless of whether the annuity was purchased by the plan administrator or privately by a spouse.[SN21] (see Chapter 5)[SN22] |
| 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 resultunder 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) |
Also note inconsistent style here, parentheses instead of square brackets
This question involves accruals under a single employer multi-jurisdictional pension plan. I believe the answer needs to be updated to reflect the 2020 Agreement Respecting Multijurisdictional Pension Plans. As shown by the updates in the answer, of 2023, all jurisdictions in Canada with pension legislation are members of the 2020 Agreement. The wording could be made clearer by replacing the first couple of sentences with the list of jurisdictions with something like, “B.C. has signed the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans, along with the federal government and all provinces except Prince Edward Island (which does not have pension legislation).” The sole effect of the 2023 amendments was to add Manitoba and Newfoundland so it would be clearer to delete the reference to “amended in 2023” to avoid implying there were other changes.
The wording in the answer that has existed since the 2016 Agreement still suggests “it is such a recent developed, its scope is yet to be explored.” In responding to this particular question, almost 10 years later, the response could be more definite in explaining the final location rule in section 7. Also, the answer leaves out the relevant point that the final location rule in section 7 selects the applicable pension legislation for determining the person’s entire benefit accrual:
SECTION 7. DETERMINATION OF BENEFITS BY FINAL LOCATION Deemed applicability
of pension legislation 7. For the purposes of determining the benefits accrued by a
person under a pension plan, the person’s entire benefit accrual shall be deemed to
have been subject to the pension legislation that applied to the person: (a) at the time
the person’s benefits were determined, if the person was still accruing benefits under
the plan at that time; or (b) at the time the person ceased accruing benefits under the
plan, if the person was no longer accruing benefits under the plan at the time the
person’s benefits were determined.