The Pension Value Statement and Independent Legal Advice

The Pension Benefits Amendment Act, effective October 1, 2021, introduces some measures to provide greater flexibility to members and their spouses or common law partners that are helpful, but there are also some major changes in some of the protective measures of this legislation governing pensions within provincial legislation. Common-law partners under this legislation are couples who have cohabited for one year if neither is married, or cohabited for three years if one or both are married. It also includes those who have registered their relationship with the Department of Vital Statistics, regardless of how long they have lived together.

For couples who separated before October 1, 2021, the old legislation remains in place. If there is an Order dividing family assets, or a Written Agreement dividing family assets, section 31(2) of the Pension Benefits Act is triggered. An agreement dividing family assets includes a separation agreement, an agreement to divide household belongings, an order to pay from the sale of a jointly owned home, or even an agreement that each will keep whatever is in their own possession. Section 31(2) provides that if there is such an Order or Written Agreement, that the pension MUST be divided unless the terms of section 31(6) are met. Section 31(6) requires that the pension division can only be waived after the parties receive:

  • a statement of the commuted value of the pension benefits accumulated during the period of the relationship (or a statement of the benefits to which the member is being paid)
  • independent legal advice.

This provision was designed to ensure informed consent, however it can sometimes lead to an inequitable result if the parties intended the pension not to be divided, and it is now subject to division unless it is confirmed after the requirements of section 31(6) are met.

For couples separating after October 1, 2021, there is no longer a requirement that they receive independent legal advice OR the statement of the value of the pension benefits accumulated during cohabitation before waiving division of the pension. For couples separating after October 1, 2021, section 31(6) has been repealed.

As a collaborative law practitioner I am a big believer in transparency, and parties being able to tailor their agreement to fit their particular needs. I believe the requirement for independent legal advice on the pension very frequently resulted in people becoming much better informed on their rights and obligations generally. It also very often led them to understand some unintended consequences of some of their decisions, and tax considerations. However, the removal of this protection is less concerning to me than the removal of the requirement for a proper pension statement of the pension value on relationship breakdown. This is because very often people think that the annual pension statement provides the value that would be included in a Family Property Act Accounting. This is not the case. If the person signs a separation agreement, or an agreement to exclude the pension, it will be too late to remedy the situation when the true value of the pension benefits that were shareable becomes known.

It is very important to make sure that you have the proper pension statement specific for relationship breakdown before finalizing the terms of your separation agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.