Marriage Breakdown and Administering Court Orders or Agreements

Subject to provincial property law and the Pension Benefits Standards Act, 1985 (PBSA), spouses on divorce and former common-law partners on the breakdown of their common-law partnership may agree on how pension benefits will be divided between the parties. Under subsection 25(4) of the PBSA, one option available to a member or former member is to assign all or part (e.g., 100%, 40% etc.) of their pension benefit, pension benefit credit or other benefit under the plan to their (former) spouse or (former) common-law partner. This option is available in addition to any division method provided for under provincial property law.

It has come to our attention that some pension plan administrators are incorrectly advising plan members under federal jurisdiction that their benefits must be divided in a specific way and are refusing to administer a court order or an agreement which does not correspond to their division method.

Subsection 25(5) of the PBSA provides that the administrator must determine and administer any pension benefit, pension benefit credit or other benefit of a pension plan in accordance with an applicable court order or agreement between the parties. An administrator must also administer an assignment made under subsection 25(4) of the PBSA.

Where a court order is not clear with respect to the distribution of any pension benefit, pension benefit credit, or other benefit under a pension plan, it may be necessary for the plan administrator to request that the parties seek further directions from the court. OSFI does not have a role in interpreting a provincial property law court order or agreement.