On March 18, FSRA announced its consultation on Proposed Guidance on Pension Administration on Marriage Breakdown, intended to assist administrators and professionals in addressing pension administration issues. In addition, it published Pensions and marriage breakdown – a guide for members and spouses. These documents benefitted from the work of the FSRA Technical Advisory Committee for Family Law Pension Matters which included pension and family lawyers, actuaries and representatives of pension plan administrators. The documents can be accessed on FSRA’s website.
These documents collect the information that FSRA has provided in the past on pension marriage breakdown issues in organized and easy to search formats. The respective documents provide relevant information targeted to either the professionals involved or the members/spouses. They cover the application of the pension/marriage breakdown provisions, valuation of pension plans for marriage breakdown purposes and issues that arise on splitting a pension – whether for purposes of the lump sum transfer for an active member or the ongoing pension payment split for the retired member. The legislation and regulations have not changed, simply the information provided by the regulator and some of their guidance.
FSRA has also provided additional clarity on their views on several issues. For those who deal with marriage breakdown impacts on pensions and plans regularly, this consultation provides an important opportunity to provide feedback to the regulator.
Issues for which FSRA has provided additional guidance or clarity include:
- General guidance to members who are resident in Ontario but have a pension under the federal or another jurisdiction, as well as application of the rules to supplemental pension plans;
- Emphasis on the fact that a pension need not be split, rather it is an option;
- Direction to members and guidance applicable to administration when the member has transferred or been paid some or all of her/his pension before a decision to split the pension so there is clarity on the assets available for a pension split;
- A checklist for drafting a settlement instrument related to a pension split;
- Guidance on impact of the Canadian Institute of Actuaries Standard of Practice effective December 2020; and
- Explanation of the uncertainty regarding impact of the death of a spouse receiving a split pension given ongoing litigation.
The announcement containing the proposed guidance and the member/spouse guide did not indicate whether marriage breakdown forms related to pensions would also be updated.
Comments are due by May 3, 2021.
Cavalluzzo's Pensions and Benefits group regularly provides advice and guidance to administrators, members and spouses regarding pension administration in the case of marriage breakdown. We are also available to assist in responding to the consultation about any concerns with the proposed guidance. If you have any questions, please do not hesitate to contact us.