The British Columbia government recently introduced changes to the Family Law Act, including amendments to the rules for pension division on relationship breakdown. These changes are part of Bill 17, which received Royal Assent on May 11, 2023.
Among other things, Bill 17 is intended to modernize and provide greater clarity and guidance with respect to pension division in British Columbia. The amendments reflect the recommendations of the Pension Division Review Project Committee for the British Columbia Law Institute following their review of Part 6 (Pension Division) of the Family Law Act. Some of these amendments will be effective immediately, while others will come into effect at a later date (likely once corollary amendments to the Division of Pensions Regulation are made).
Bill 17 amends the rules regarding pension division under Part 6 of the Family Law Act as follows:
- Designation of Limited Members: Allows for a deceased spouse’s personal representative to file a notice to cause the spouse’s estate to become a limited member of certain types of pension plans.*
- Commuted Value Transfer Options: Clarifies that a limited member’s options for receiving a commuted value transfer of their entitlements under a pension plan must be consistent with the options available to the plan member.**
- Locked-in Retirement Accounts (LIRA) / Life Income Funds (LIF): Adds a new section providing for the division of benefits in a LIRA or LIF.**
- Annuities: Clarifies the circumstances when the Family Law Act’s pension division rules apply to annuities.**
- Disability Benefits: Clarifies that a member’s entitlement to disability benefits does not affect the manner in, or time at, which other benefits under the pension plan are to be divided.*
- Calculation of Proportionate Share: In cases where the member dies before pension commencement and before the limited member receives their proportionate share, permits the commuted value of the limited member’s proportionate share to be calculated as of a date set by regulations (previously it had to be calculated as of the day before the member’s death).*
- Survivor Benefits: Revises the manner in which a spouse may waive their right to receive survivor benefits payable under a plan.**
- Administrative Costs: Provides that an administrator must deduct a fee from the payment of benefits unless the member or spouse or both pay the fee.**
- Transition Provisions: Updates the transitional provisions that provide how pension divisions that pre-date the Family Law Act are treated under the Family Law Act.*
Pension plan administrators should be aware of these changes as they may have an impact on the way in which a member’s pension is to be divided upon relationship breakdown. If you have any questions about these changes to the Family Law Act and their effect on the division of pensions under your pension plan, please contact a member of our Pensions and Employee Benefits Group for more information.
* Now in force (came into force on May 11, 2023).
** Not yet in force (will come into force at a later date by regulation of the Lieutenant Governor in Council)
Meghan is a partner in the firm’s Pension and Employee Benefits Group. She acts for boards of trustees and other sponsors of pension and benefit plans in the private and public sectors in British Columbia, Saskatchewan and Alberta.
Jessica is an associate in the Pension and Employee Benefits Group of Lawson Lundell. She works with the group to advise plan sponsors, boards of trustees and plan administrators in Western and Northern Canada on pensions and ...
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