The Financial Services Regulatory Authority of Ontario (FSRA), in the interest of promoting the good administration of pension plans for all beneficiaries, has published and is seeking comment on a new, proposed guidance document regarding processes for valuation and division of pension assets upon marriage breakdown.  

The overview for plan administrators includes guidance on out-of-province separations and court orders (pension assets are to be divided based on the rules of the jurisdiction where the pension was earned), pension benefits that are not subject to the Pension Benefits Act (PBA), and interpretation of rules affecting valuation, payment and division of assets and survivor benefits. It also addresses the calculations used in multi-employer pension plans, indexing, survivor benefits and the use of buy-in or buy-out annuities. 

FSRA is inviting stakeholders and the general public to submit feedback on the proposed guidance on or before May 3, 2021.  

“The purpose of this guidance is to support administrators in satisfying their obligations relating to the valuation and division of pensions on marriage breakdown,” FSRA writes in the document. They add that the guidance also provides interpretations of the PBA.  

“Pensions are included in the definition of ‘family property’ in Ontario’s Family Law Act (FLA) and must be considered as part of the net family property as a whole,” they write. Although they add “FSRA does not have a regulatory decision-making function as it relates to the valuation and division of the pension asset,” they say “FSRA’s role is to support administrators’ compliance with their statutory obligations which are generally for the benefit of plan members and their spouses.” 

They add that the guidance focuses on the administration of court orders, family arbitration awards and domestic contracts made after January 1, 2012. Those dated before that time are subject to the pre-2012 pension valuation and division rules in the province.  

“FSRA is aware of the complexity in marriage breakdown and in particular, the interconnection of pension law with family law, tax law and estate law, as well as the diverse interests of various stakeholders, including administrators, members, spouses and professional advisors,” they write. “FSRA will strive to be transparent and act consistent with its statutory objects to promote good administration of pension plans and protect and safeguard the pension benefits and rights of all pension plan beneficiaries.”