Pension Division Review Project Committee examines double-dipping, limited membership at September 2019 committee meeting
September 20, 2019
BY Kevin Zakreski
At its monthly committee meeting, BCLI’s Pension Division Review Project Committee looked at two topics that could lead to recommendations for additions to part 6 of the Family Law Act. The first topic concerned a possible extension to an existing rule providing for no further entitlement to a spouse’s pension benefits after a division of benefits under part 6. The second dealt with a hypothetical scenario in which a spouse dies after separation but before completing the steps necessary to become a limited member under the other spouse’s pension plan.
The first topic involves something that has been informally called double dipping. This may occur when a spouse receives a share of the other spouse’s pension benefits under family-law legislation and still may be entitled to other benefits or a share of benefits under other legislation. In British Columbia, section 145 of the Family Law Act and provisions that were brought in when the new Pension Benefits Standards Act was enacted have addressed this problem. But the reach of these provisions only extends as far as British Columbia legislation—a point that’s made clear in section 145 (1). On paper, double dipping may still be possible if a pension were divided under part 6 of the Family Law Act and that pension were regulated by, say, the federal Pension Benefits Standards Act, 1985. While constitutional-law doctrines would stand in the way of addressing this concern solely by amending part 6, the committee discussed the possibility of a coordinated response among Canadian jurisdictions to this problem.
The second topic featured discussion of a hypothetical situation. In it, spouses separate, which creates rights under the Family Law Act to family property (“on separation, each spouse has a right to an undivided half interest in all family property as a tenant in common, and is equally responsible for family debt”). Family property expressly includes “a spouse’s entitlement under an annuity, a pension plan, a retirement savings plan or an income plan.” Because it’s difficult in practice to divide these plans, the legislation requires that this task be carried out under part 6. Part 6 provides that, in many cases, the division is to be effected by the non-member spouse becoming a limited member of the member spouse’s plan. There is a procedure established under the act and its regulation to carry out this process, a key part of which is a court order or an agreement between the spouses, containing terms on pension division.
The issue is that the procedure takes time to complete, and in that time something may go wrong. In the hypothetical considered by the committee, the spouse dies after the right to division of family property comes into existence (on separation) but before carrying out the steps required to perfect that right (becoming a limited member or, even, entering into an agreement or obtaining a court order). General principles of estate law may help to address this situation. But the committee considered in the meeting whether an amendment to the Family Law Act could bolster and clarify those principles in this specific case.
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.