Pension Division Review Project Committee continues examination of commuted-value transfer, tackles private annuities at June 2019 meeting
26 June 2019
By Kevin Zakreski
At this month’s meeting, the Pension Division Review Project Committee continued its review of commuted-value transfer and began to examine private annuities.
Section 115 of the Family Law Act applies to division of a pension with benefits determined under a defined-benefit-formula provision, if the pension is a “local plan” and it “has not commenced.” The section gives the spouse who has become a limited member under the plan a number of options. One of these options is “to have the limited member’s proportionate share of the commuted value of the benefits transferred from the plan to the credit of the limited member.” At a previous meeting, the committee discussed whether this option should be curtailed in circumstances in which the plan member wouldn’t be able to take a commuted-value transfer. At this meeting, it examined a possible inconsistency in the calculation of commuted value under the Division of Pensions Regulation and the Pension Benefits Standards Regulation.
Section 118 of the Family Law Act is dedicated to private annuities. It provides that “the provisions under this Part [i.e., part 6] that apply to the division of benefits after pension commencement apply to the division of the annuity.” This declaration has the effect of making section 117—a general provision that deals with pension division of local plans after the pension commences—applicable to private annuities. In the meeting, the committee considered the implications of grouping private annuities with pensions, given that annuities have some features that have no equivalents in pension plans.
The Pension Division Review Project benefits from having an expert project committee. The committee is working toward publishing a consultation paper, in which it will set out proposals on these and other issues. The consultation paper will allow the public to comment on the committee’s proposals to reform pension division under the Family Law Act.