For those going through separation and divorce, there are new rules that come into effect on January 1, 2012, in Ontario. The changes have to do with how pensions are to be valuated for the purpose of being divided between separating couples. The bill I’m referring to is Bill 133, that changes this portion of the Family Statute Law Amendment Act, dated 2009.
As a long-time family law lawyer, I see three problems with these incoming changes.
First, there is no recourse or complaint department, if couples disagree with how the pension administrator values the pension.
Second, the new legislation has a Cinderella clause, meaning that if separating couples do not reach agreement on pension division by midnight on December 31, 2011, all effort, time and money on pension valuators will be wasted and they will be forced to use the new rules on January 1.
Third, it’s also likely that these incoming rules will create an instant backlog, caused by a spike in volume of people looking to have pensions valued.
Beginning in the New Year, using newly developed formulae prescribed by the new regulations, pension plan administrators at the actual pension organizations – not independent valuators retained by one or both of the separating parties – must determine the value of the benefits available for division between separating spouses. There are no required credentials for the individuals that will be completing the calculations.
What if the pension plan administrator undervalues, or over-values the pension? What recourse do you have? As of January 1, none!
Under the old system, if you were unhappy or in disagreement with the findings of a pension valuator, you had the option of getting a second opinion, or even a third and fourth opinion. Under the new rules, there is no recourse if you’re not happy about how the pension is to be divided.
Under the new system, there is no mechanism for disagreement with the results produced by the pension plan administrators. The Government of Ontario did not think about this issue when they drafted the legislation and the regulations regarding Pensions.
In my opinion, there are two options as to how this will resolved — eventually.
Either a Family Court Judge will make a decision as to the value of the Pension, notwithstanding that they do not have the statutory authority to do so. Judges enforce legislation, they don’t make legislation.
A second option is that a party will be forced to commence a second costly law suit, in a different court against the Pension Plan administrator, relying on Administrative Law principles. I would hope that this does not happen, because this would be a very expensive result, but in my opinion it is the proper result under the current legislation.
Given that the new legislation becomes effective January 1, 2012, I encourage the Government of Ontario to rectify this glaring omission as soon as possible.