Amendments to Pension Benefits Act reverse Carrigan decision
September 2, 2014
To implement certain aspects of the 2014 Ontario budget, the province passed Bill 14 - Building Opportunity and Securing Our Future Act (Budget Measures) on July 24, 2014. The Bill included amendments to the Ontario Pension Benefits Act (PBA) to reverse the impact of the Ontario Court of Appeal’s 2012 decision in Carrigan vs. Carrigan Estate regarding the entitlement to death benefits in situations of "dual spouses".
The new legislation extends pension death benefits under section 48 (pre-retirement death benefits) and section 44 (joint and survivor pensions) to common law spouses and clarifies the following: (for additional background, see GRS matters articles distributed July 2 and August 26, 2013.)
The person who qualifies under the PBA as a common law spouse is entitled to the pre-retirement death benefits in circumstances where:
- A plan member is legally married to a spouse, but living separate and apart from that person at death
- The plan member is not retired and receiving a pension
- The plan member is living with a common law spouse at the date of death
The person who qualifies under the PBA as a common law spouse is entitled to the joint and survivor pension in circumstances where:
- A plan member is legally married to a spouse, but living separate and apart from that person on the date that the payment of the first instalment of the pension is due
- The plan member is living with a common law spouse on the date that the first instalment of the pension is due
- The plan member’s pension commenced prior to death
- In cases under the circumstances described above where a decision on pre-retirement death benefits was made after the Ontario Court of Appeal’s ruling on October 31, 2012 and before the PBA amendments enacted July 24, 2014:
•Under the Ontario Court of Appeal’s ruling, neither the common law spouse nor the legally married spouse who was living separate and apart from the member was entitled to the pre-retirement death benefit – it became payable to the beneficiary designated by the plan member or, if no beneficiary was named, to the member’s estate. The new legislation will not reverse any pre-retirement death benefit entitlements made to a beneficiary during that time.
- Plan administrators are discharged from pre-retirement death benefit payments made prior to the Ontario Court of Appeal’s ruling October 31, 2012 (where payment was made in favour of a common law spouse when the member was legally married to a spouse, but living separate and apart from that person). A discharge is also available to plan administrators who began paying a joint and survivor pension prior to July 24, 2014 based on a plan member’s common law relationship even though the plan member was not divorced from his spouse by marriage.
- If Sun Life previously prepared your company's plan text and/or member booklet, future amendments will reflect wording consistent with the new legislation.
- Sun Life Financial’s pre-retirement death benefit process will return to the process followed prior to October 31, 2012 (if there is a common law spouse who is living with a plan member at the date of death, the common law spouse is entitled to the pre-retirement death benefit).
- Sun Life Financial will not be communicating these changes to plan members. A sample communication has been provided for your use.
Please contact your Sun Life Financial Group Retirement Services representative.