Changes to part 6 of the Family Law Act included clarifying and modernizing law on: locked-in retirement accounts and life income funds; private annuities; assignment of survivor benefits; calculation of commuted value; and, administrator fees.

Further, changes to the Division of Pensions Regulation included: requiring the plan administrator to annually notify a limited member who has not yet received benefits of the earliest date of the limited member’s pension eligibility; raising the maximum administrative fee for registering the spouse as a limited member of the plan and for transferring a proportionate share of the member’s defined contribution account to the credit of the spouse; revising forms P1-4 and P6-9; and, repealing form P5.

BCLI has continued its commitment to improving family law in BC through its Pension Division Questions and Answers series. The Q+A is a definitive guide on navigating the complex legal issues that arise when a spousal relationship breaks down and the family property to be divided includes benefits in a pension plan.

On December 19, 2024, the BCLI staff and volunteer editors met to discuss the 5^th edition of Pension Division Q+A. At the meeting, the group determined that potential areas for review included:

• case law;
• terminology;
• annuities;
• prescribed forms;
• administrative fees;
• Family Law Act amendments;
• references to Rutherford v Rutherford (1981 CanLII 726 (BCCA), 127 DLR (3d) 658), a leading case prior to B.C. enacting pension-division legislation;
• industry developments; and,
• locked-in retirement accounts and life income funds.

The 5^th edition Q+A will be an important guide for navigating recent legislative changes, new case law, and evolving pensions practice.

Quick links:

• Bill 17, Family Law Amendment Act, 2023 (first reading)
• Report on Pension Division: A Review of Part 6 of the Family Law Act (PDF)
• Pension Division Questions and Answers 5^th Edition Webpage
• BCLI Blog “BCLI Pension Division Report Recommendations Implemented”
• BCLI Blog “BCLI welcomes pensions division reforms”

The post Pension division reform and fifth edition Q+A updates first appeared on British Columbia Law Institute.

On 29 March 2023 an open letter signed by leading tech experts calling for a pause on Giant AI Experiments was released.[1]  It asks governments and the global research community for a minimum 6-month pause in training artificial intelligence systems larger than GPT-4, the next iteration of the system that powers ChatGPT.[2] Signatories include  Elon Musk, Steve Wozniak, and prominent AI experts and researchers in major AI labs around the world. An author of a leading textbook on AI has signed on. The open letter raises serious concerns about the uncontrolled development and expansion of AI systems that even the creators of the systems cannot “understand, predict, or reliably control.” It emphasizes a need for agreement on safety protocols for the design and development of advanced AI systems to curb what it sees as “the dangerous race to ever-larger unpredictable black-box models with emergent capabilities.”[3] The open letter includes liability for AI-caused harm in a list of several essential policy elements for the governance of AI. 

Through practical, just, and balanced reform, the BCLI Artificial Intelligence and Civil Liability Project is aimed at ensuring that tort remedies will provide effective redress for AI-related harm at a time in wherein AI is increasingly pervasive.  We will issue a consultation paper in the spring of 2023 setting out tentative recommendations for public comment.  Look for the consultation paper later this spring on the project webpage.

[1] See Pause Giant AI Experiments: An Open Letter – Future of Life Institute.

[2] ChatGPT is currently powered by GPT-3.5.  GPT stands for “Generative Pre-trained Transformer.”  While ChatGPT was designed to produce text resembling the writing of humans in response to inputs by humans, GPT-4 is a large general-purpose language model that is able to perform many other functions.

[3] “Emergent capabilities” refers to the phenomenon of “emergence.”  Emergence is unpredictable, original, and unprogrammed behaviour of an AI system or AI-controlled device as it seeks ways of achieving programmed objectives.

The post International Call for Six-Month Pause in Giant AI Experiments Shows Importance and Timeliness of BCLI’s AI and Civil Liability Project first appeared on British Columbia Law Institute.

When it is enacted, the bill’s amendments will provide a host of improvements to BC’s comprehensive legislation on pension division. These improvements include clarifying and modernizing the law on locked-in retirement accounts and life income funds; private annuities; waiving survivor benefits after pension commencement; the powers of a personal representative after the death of a spouse; commuted value: transfer and calculation; disability benefits; and transitions.

BCLI’s Report on Pension Division: A Review of Part 6 of the Family Law Act was published in March 2021 as the culmination of its project on pension division. The project featured over two years’ work by an expert project committee and a broad-based public consultation.

Quotes

“I’m happy to see the introduction of amendments to part 6 of the Family Law Act. BCLI’s Pension Division Review Committee examined part 6 for over two years and recommended changes that would improve how pension division works for separating spouses. The BCLI committee’s recommended changes will enhance BC’s pension-division system for all stakeholders, including boards of trustees of registered pension plans, administrators, pension and family-law lawyers, and individual plan members and spouses.”—Colin Galinski, Chair, BCLI Pension Division Review Project Committee

“BCLI is grateful to see our recommendations become implemented in a bill that will improve the law on pension division. On behalf of BCLI, I would like to thank the Pension Division Project Committee and all who participated in the project’s public consultation for their assistance in developing these reforms to an important area of the law.”—Tejas B. V. Madhur, Chair, British Columbia Law Institute

Quick links

• Bill 17, Family Law Amendment Act, 2023 (first reading)
• Report on Pension Division: A Review of Part 6 of the Family Law Act
• Backgrounder—Summary of the Report on Pension Division: A Review of Part 6 of the Family Law Act (PDF)
• Backgrounder—Pension Division Review: Legislative Fact Sheet (PDF)
• Backgrounder—Quick Facts about the Pension Division Review Project (PDF)
• Backgrounder—Members of the Pension Division Review Project Committee (PDF)
• Pension Division Review Project Webpage
• BC government announcement “Changes to Family Law Act will make it easier for separating couples”

The post BCLI welcomes pension division reforms first appeared on British Columbia Law Institute.

Brief description of the issue

Since the advent of the Family Law Act, case law has consistently held that locked-in retirement accounts and life income funds should be divided under part 5 of the act. Should the act be amended to change this conclusion, by providing that locked-in retirement accounts and life income funds should be divided under part 6?

Discussion of options for reform

This issue is essentially a choice between proposing amendments to part 6 or deciding to remain with the status quo.

The main argument in favour of amending part 6 to embrace locked-in retirement accounts and life income funds is that they are closely connected with pensions. The funds used to purchase them derive from a pension. Part 6 contains a suite of sophisticated rules that apply to the division of pensions, which can be extended to cover locked-in retirement accounts and life income funds.

On the other hand, there may be advantages to the status quo. It has been said that relying on part 5 “presents no practical problem for dividing benefits in these types of plans.” Moving to division under part 6 might create administrative burdens for providers of locked-in retirement accounts and life income funds.

The committee’s recommendations for reform

The committee favours bringing division of locked-in retirement accounts and life income funds into part 6. In its view, part 6 contains a more comprehensive set of rules and will likely provide for a fairer result in most cases.

The vast majority of respondents to the consultation paper supported the committee’s proposal.

The committee recommends:

Funds in a locked-in retirement account or life income fund should be divisible under part 6 of the Family Law Act.

Moving division of locked-in retirement accounts and life income funds to part 6 naturally raises the question of which of the part’s rules will apply to that division. In the committee’s view, the principle that should guide the answer to this question is to apply the rules that would have applied to the pension benefits that were transferred to fund the locked-in retirement account or life income fund.

As was the case for the previous recommendation, this recommendation also had the support of the vast majority of consultation respondents.

The committee recommends:

The rules applicable to the benefits under the transferring pension plan should apply to the division of the locked-in retirement account or life income fund.

For more information, visit the Pension Division Review Project webpage or read the Report on Pension Division: A Review of Part 6 of the Family Law Act.

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Brief description of the issue

When the Family Law Act was enacted, a new provision was added to deal expressly, for the first time, with the division of “benefits under an annuity that is purchased by the member rather than by an administrator on behalf of the member.” Under this provision, these private annuities are to be divided in the same manner as pensions under local pension plans after payment of pension benefits has commenced. Is this the best approach to dividing a private annuity after the breakdown of a spousal relationship?

Discussion of options for reform

There may be advantages to retaining section 118 in its current form. The section largely fulfills its purpose, which is to clarify the law. Thanks to section 118, it is now clear that private annuities may be divided under part 6. This approach ensures that the sophisticated tools for pension division are applicable to private annuities. In their absence, spouses would have to come to an agreement under part 5 on how to divide a private annuity. If they couldn’t come to an agreement, a dispute over division of a private annuity would have to be resolved through litigation. As has been noted throughout this report, the policy of the Family Law Act is to strive to keep these kinds of disputes out of the courts.

But, that said, there may also be drawbacks to the current approach. Section 118 rests on the insight that it’s desirable to divide a private annuity in the same manner as a pension under a local pension plan after pension commencement. In practice, drawing these two different things so tightly together may create problems and uncertainties. This point raises the concern that section 118 might be out of step with the broader policy of part 6, which is to provide detailed rules for pension division that are tailored to specific kinds of pensions. Instead of taking this approach, section 118 simply relies on an analogy between private annuities and local plans after pension commencement. This analogy might not be possible to sustain through the entire process of dividing the private annuity.

Finally, unlike many other issues for reform in this report, this issue doesn’t present a clear-cut, yes-or-no policy choice. The proposed response to this issue could reasonably include elements of the current law along with specific changes to it.

The committee’s recommendation for reform

The committee gave extensive consideration to this issue. In the end, it settled on an approach that would preserve and clarify some aspects of the current law and would change other aspects of it.

The committee is of the view that the equivalence created in section 118 between private annuities and local plans after pension commencement is open to question. In particular, it was noted that annuities may be purchased all at one time. In this way, they can lack the temporal element that is integral to pensions. This can create problems in applying the formula for determining a proportionate share of a pension to an annuity.  There is simply no equivalent to the concept of pensionable service for an annuity. This creates uncertainty for a key aspect of the formula that applies to division of an annuity.

The committee also noted that annuity is a very broad term. The funds used to purchase an annuity may come from a variety of sources. These funds may not, in practice, derive from pension funds.

That said, dividing an annuity retains many aspects of the division of an income stream. Looked at in this respect, it does make sense to divide many annuities under part 6, because part 6 has appropriate tools for the division of an income stream. If the annuity is in pay, it should continue to be divided under part 6. If not, then the Family Law Act should be amended to clarify that division of the private annuity is under part 5.

The committee decided to propose retaining division under part 6 for some private annuities, while requiring an order or agreement under part 5 for others. In the committee’s view, the relevant dividing line is whether payments have commenced under the annuity. If the annuity is in pay, then it should be divided under part 6. If not, then the Family Law Act should be amended to provide for division of the private annuity under part 5.

The committee’s proposal had the unanimous support of respondents to the consultation paper. But as a result of comments in one of those responses, the committee has refined its proposal, by deciding to remove paragraph (a) (ii) from its recommendation (“division should be 50-50 to each spouse, subject to a different share by agreement or court order”). In the committee’s view, this language could cause some unwanted consequences, as it may open to an interpretation that puts it at odds with the provisions of part 5 of the act. What remains as recommendation no. 5 (a) is intended to clarify the law and not to change it.

The committee recommends:

The Family Law Act should be amended to make the following changes to the treatment of private annuities:

(a)  for annuities that have been purchased but are not in pay then the drafting of the provisions should be clarified such that it’s clear that the legislation applies to the purchase of an annuity for a member or spouse; and

(b)  if the annuity for a member or spouse is in pay, then part 6 applies, and the income stream should be divided 50-50 to each spouse, subject to a different share by agreement or court order, and a spouse is entitled, by giving notice in accordance with section 136 of the act, to receive a share of the benefits payable under the annuity directly from the annuity issuer during the annuitant’s lifetime until the earlier of

(i)    the death of the spouse, and

(ii)    the termination of benefits under the annuity.

For more information, visit the Pension Division Review Project webpage or read the Report on Pension Division: A Review of Part 6 of the Family Law Act.

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