Karen Thompson-Harry, a family lawyer in Erin, answers:
In Ontario family law, the definition of “property” in the Family Law Act includes: “in the case of a spouse’s rights under a pension plan that have vested, the spouse’s interest in the plan including contributions made by other persons” (s. 4(1)(c)).
Pensions, whether in pay (meaning when an employee is actually receiving a monthly pension benefit) or not yet in pay, are considered property, just as an RRSP or a house is considered property. The pension may need valuation by an actuary, depending on the type of pension plan. There are different methods of valuing these types of pensions, and they will require an actuarial valuation by an expert. Future income tax that will be payable on the pension is considered and accounted for in its value. The value may also fluctuate, depending on the anticipated date of retirement. If the separating couple cannot agree upon the value for the pension and the anticipated date of retirement, this issue may be litigated; the court will decide, on the balance of probabilities, what the likely retirement date will be based upon the evidence presented, and the pension will be valued accordingly. Only the value of the pension that accrued during the marriage, up to the date of separation, is included in the spouse’s net family property.
If the separating couple is negotiating a settlement, there are different options available with respect to how to share in this value. It may be possible to make the equalization payment in a lump sum, including the value of the pension, or to defer it. If there are not enough assets to pay this in a lump sum, it may be paid if and when the employee receives the pension.
Pensions are complicated, and as a rule, both spouses should seek independent legal advice to review their entitlements and the law.