Law Commission of Ontario Recommendations on Division of Pensions on Marital Breakdown

The Law Commission of Ontario (LCO) has released its recommendations in relation to the division of pensions on marital breakdown.

"Among the most important recommendations is that Ontario adopt as the primary settlement mechanism the Immediate Settlement Method (ISM). Where the spouse with the equalization obligation is a member of a pension plan and wishes to resort to his or her rights under the plan to satisfy the obligation, legislation would (if the recommendation were to be adopted) provide for a transfer out of the fund of the pension plan to the benefit of the other spouse (...) . However, in certain cases, the LCO believes that separating spouses should be able to opt for the Deferred Settlement Method (DSM). Under the DSM, the spouse to whom the equalization obligation was owed would become a quasi-member of the member spouse’s pension plan and would become entitled to receive his or her own pension from the plan when the member retired (or on the member’s normal retirement date where the member postpones retirement beyond that date). The LCO is recommending that this option generally be available only where the member is within ten years of his or her normal retirement date and both spouses agree to it; however, it would also be available where the member was more than ten years from the normal retirement date if both the spouses and the pension plan administrator agree."

The recommendations have been presented to the province's Attorney General for consideration of appropriate amendments to the Family Law Act.

The LCO had published a consultation paper on the issue in May 2008.