In order to determine the value of your spouse’s pension, it is necessary to determine whether the pension is provided under a defined contribution (or RRSP-type) pension plan or under a defined benefit pension plan where the amount of pension is defined by formula.
In the first case, the value before deducting for the tax that will have to be paid on the pension would be the amount of the spouse’s account balance at the date of separation. From this would be deducted the corresponding balance at the date of marriage.
In the case of a defined benefit plan, the calculations are more complex and it would be desirable to have the spouse’s benefits valued by an actuary who is professionally qualified to do so. The actuary would determine the values of benefits accrued up to the date of separation on the basis of various scenarios regarding future employment and retirement and would also adjust the values so as to reflect only benefits in respect of service over the period of the marriage.
In this case as well, it would be necessary to estimate the spouse’s tax rate during receipt of the pension, and this would form part of the valuation process.
Ben Dibben is a qualified actuary with Eckler Partners Ltd. who has specialized in actuarial work in marriage breakdown situations for approximately twelve years.