II. BACKGROUND

The fundamental premise of the “Family Property” provisions of Part I of Ontario’s Family Law Act[2] (“FLA”) is that marriage is an economic partnership, and that where that partnership breaks down, the spouses are entitled to share equally not only in the value of any assets that were acquired during the marriage, but also any growth in the value of previously-acquired assets that occurred during that time. In that regard, the Act establishes the concept of “net family property”, comprising (subject to some exceptions) the value of all the property that a spouse owns on the “valuation date” (generally, the separation date)[3], less liabilities and the value of any property the spouse took into the marriage. Under the Act’s equalization provisions, the spouse with the lower-valued net family property is accorded an entitlement to half of the difference between his or her net family property and that of the other spouse.[4] The word “property” is defined to include rights under a pension plan that have vested;[5] thus, the value of such rights must be included in the calculation of a plan member spouse’s net family property.

 

 

While the inclusion of the value of pension rights in the equalization process had the highly laudable goal of achieving greater fairness between the spouses following marriage breakdown, it is also, on the current state of the law, highly problematic insofar as defined benefit pensions[6] are concerned. The difficulties exist with respect to both valuation and settlement (i.e., satisfying the equalization requirement); indeed, the problems are inter-related.

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