A. Canada Pension Plan Credits

Credits under the CPP fall within the FLA definition of “family property, making them subject to the equalization regime, although it appears that the point is largely ignored in practice, with CPP credits simply being omitted from the calculation of net family property.[212] Therein, however, lies a trap for the unwary and the overtrusting.

The CPP provides for a division of credits upon marriage breakdown, with credits earned during the marriage by a spouse being divided equally between him and the other spouse; where an application for division is made, the federal authorities are required to divide the credits unless the two spouses have agreed that there should be no division and the family legislation of the province in question permits such agreements. While some other provinces have enacted permissive legislation of this nature,[213] Ontario has not done so. This has sometimes led to instances where a party agreed under an equalization settlement not to apply for a credit split, only to make such an application at a later date.

In Albrecht v. Albrecht,[214] the Ontario District Court was faced with this very situation. Striving to do justice, it held that a wife who had applied for a division of CPP credits despite having received consideration for waiving all claims to the other spouse’s property was estopped from retaining for her own use any portion of the pension that was paid over to her by the federal authorities and ordered that she remit any such portion to him. The decision was reversed by the Ontario Divisional Court,[215] which ruled that there was had no authority to make such an order in light of the absence of provincial legislation allowing contracting out of the CPP credit division provisions.

Such disturbing cases raise the question of whether Ontario should enact legislation expressly excluding such credits from net family property[216] or allowing the parties to agree that they not be divided under the CPP.[217]

B. Common Law Spouses

As was noted above, Part I of the FLA does not apply to couples who are in a common law relationship. The LCO does not intend in this report to address the issue of whether they should be covered by Part I, as that is an issue that goes beyond pensions.[218] We would note, however, that common law couples who experience relationship breakdown may have property issues to deal with (as where a constructive trust is imposed in respect of an asset belonging to one partner in favour of the other) and that in any case some couples may wish to achieve (or at any rate, approach) equalization simply out of their own sense of what is fair. To the extent, however, that division of one partner’s pension is contemplated, they would face the same problem stemming from a lack of good settlement options as married couples face, that is, there is no ability to effect an immediate transfer of a share of the member’s interest under a pension plan to her former partner (except in the situation where the member’s employment terminates), nor is a DSM type of solution available. (The member and former common law partner, like former parties to a marriage, could agree to an “if and when” arrangement, but such arrangements are highly problematic, as was explained above.)

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