As BC family property division lawyers, we deal with division of parties’ private and CPP pensions at separation. We also see common mistakes regarding failures to deal with CPP credits whether by dividing or waiving a claim to these credits. One of the vexing issues in family property pension division occurs when there is a separated married spouse and a new common law spouse when a pension plan member dies. In recent years the common law spouse would prevail but not so in a recent high profile Ontario case.
Our New Family Law Act has new pension rules, notably section 124 of the Act, to prevent confusion when there are multiple spouses but this rule only applies if you see a lawyer to get an agreement or court an order in place. Don’t delay, act now call us toll free at 1 877 602 9900.
Here is a recent Financial Post article on the Supreme Court of Canada’s refusal to hear an appeal from a 2-1 split Ontario Court of Appeal decision where a separated spouse failed to have an order or agreement in place.
” One of the most important pension rulings in recent memory, the Ontario Court of Appeal’s decision in Carrigan v. Carrigan Estate, will stand because the Supreme Court of Canada says it will not review the case.
The case provides a dramatic shift in the way pension plan administrators must deal with the death benefits for spouses of plan members. For years, plan administrators understood that such benefits should go to common-law spouses. Yet as the Ontario Court of Appeal interprets the province’s pension statute in Carrigan Estate, the benefits should go to legally married spouses – even after a couple has been separated for a long time.
There was some thought the SCC would hear an appeal, especially since the Ontario appellate ruling was a split 2-to-1 decision challenging a long-held understanding of who is entitled to receive pre-retirement death benefits under the formula spelled out in the Ontario Pension Benefits Act (PBA).
The common practice among plan administrators in Ontario was if a pension plan member died before reaching retirement, a common-law spouse who had been living with a member on the date of death would be entitled to the benefits. This view was based on a commonly held interpretation of section 48 of the act, which deals with who should be entitled to the benefits.
The majority in the Ontario Court of Appeal read the act in a different way. The Carrigan Estate case involved a married couple who separated many years ago, but never divorced. Since that separation, the plan member had begun a lengthy common-law relationship with another woman. He died before he could retire. The appellate court ruled the original spouse was the one entitled to the benefits.
“The Carrigan case changed not only how pension plan administrators must pay pre-retirement death benefits in the future, it also called into question past payments of preretirement death benefits which had been made in similar circumstances, creating the risk of legal claims from deceased members’ named beneficiaries or estates,” said Douglas Rienzo, of Osler, Hoskin & Harcourt LLP.
The Ontario decision caught a lot of pension plan administrators off-guard.
“In light of FSCO’s letter, it remains to be seen whether there will be any policy or legislative changes to restore FSCO’s interpretation of section 48 or to address some of the administrative concerns raised by the decision,” wrote Rachel Arbour, Stephanie Kalinowski, and Natasha Monkman of Hicks Morley Hamilton Stewart Storie LLP in a note on the refusal to hear an appeal.”
If you have a family property division case you need to find out how the new law affects you. Contact us now.
