BY: VALERIE DYE
Under the Family Law Act ‘property’ or ‘net family property’ includes all an individual’s property including his or her pension. The significance of this is that at the time of separation or divorce the pension is included for the purposes of equalization or division of property. It does not mean that there can be an automatic transfer of part of one spouse’s pension to the other spouse. Under the Pensions Benefits Act, a spouse’s pension will be divided if the Court orders a division and transfer of a portion to the other spouse or if the parties enter into a domestic contract which provides for the division of the pension and the transfer of a portion of that pension to the other party. Furthermore, case law has shown that the Court will only order a division and transfer of pension to the receiving party (the recipient) if the paying party does not have enough means to make the equalization payment. Let’s assume for instance that spouse A has net family property valued at $300.000 and spouse B has net family property valued at $400,000. Obviously, since spouse B has more assets he or she has to make an equalization payment to spouse A of about $50,000. Spouse B may not have $50,000 in liquid cash but may have a pension valued at $70,000. In that case, the Court may order or the parties may agree to have spouse B’s pension divided and a portion of it transferred to spouse A.
Although a spouse’s pension may have a particular value at a particular time, what needs to be ascertained for the purposes of division and transfer is the family law value of the pension. This family law value is arrived at by determining the date the parties commenced cohabitation or the date they got married and the date of separation. The value of the pension for that period is referred to as the family law value. For instance, Spouse B may have a pension value of $70,000 but this value was acquired between 2000 and 2014. If Spouse B married Spouse A in 2006 and they separated in 2013 then a division and transfer can only be in relation to the value of the pension for that seven-year period. This value is termed the ‘family law value’ and spouse A will only be entitled to a portion of that value, not a portion of the $70,000.
Who may apply for a family law value of pension
Once parties are married either spouse may apply for a statement of the family law value of the pension. If parties are not married only the party who owns the pension may apply for a statement of the family law value of the pension.