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B.C.’s New Family Law Act and Division of Pension Rules Now in Force 

by Meghan Popp

Published: March, 2013

Submission: April, 2013

 



The new Family Law Act (“FLA”) came into force today, March 18, 2013. It replaces and repeals the Family Relations Act (“FRA”). The FLA carries forward the basic structure established under the FRA, with some fine tuning to deal with issues not adequately addressed under the FRA.


This bulletin highlights the major changes to pension division under the new FLA.




Application to Common Law Spouses:

  • Unlike the FRA, the pension division rules in Part 6 of the FLA apply to unmarried spouses who have lived in a marriage-like relationship for at least two years, in addition to married spouses.


Division of Benefits:


Defined Contribution (DC) Plan



Defined Benefit (DB) Plan


Before Pension Commencement:


  • Spouse receives share of the benefits by an immediate locked-in transfer to a prescribed retirement savings vehicle.
  • Applies where DC account is used to purchase of an annuity and where DC account may be used to make withdrawals after pension commencement.
  • If administrator consents, spouse can become a limited member.

After Pension Commencement:

  • No change from FRA.

Before Pension Commencement:


  • Spouse becomes a limited member.
  • After member becomes eligible to start the pension, spouse can take:
    • a lump sum transfer (subject to the PBSA locking-in provisions); or
    • a separate pension payable for the spouse’s lifetime

(Under the FRA, a separate pension was only available if the spouse waited until the member elected to have the pension commence.)


  • Calculation of benefit: Former spouse's separate pension is calculated based on the value of the benefits if the member had commenced a pension at the average age of retirement for the plan (even though FLA permits a spouse to elect a separate pension at any time after the member is eligible for pension commencement)

After Pension Commencement:


  • No change from FRA.


Supplemental Plan



Other Plans


Before Pension Commencement:


  • Spouse’s share of the benefits can be a separate pension, with other options available with the consent of the plan administrator

(The FRA required the spouse to wait until the benefits become payable and then take a share of the income stream.)


After Pension Commencement:


  • No substantive change from FRA.

Individual Pension Plans (IPP):


  • Spouse becomes a limited member and receives the share by separate pension when the member elects to start the pension, with other options available with the consent of the plan administrator.
  • Change from the FRA which only allowed for a division of the income stream after pension commencement.

Disability Benefits to be Divided Pursuant to an Agreement or Order:


  • Spouse can receive a share at any time after the agreement or order is made.

(Under the FRA, the provisions in respect of disability benefits only applied after the member attained age 60).




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