VII-1 (Excerpted from Thompson and Thomas, Family Law, (Dalhousie Law School, 2005), with some minor revisions)

Transcription

1 VII-1 (Excerpted from Thompson and Thomas, Family Law, (Dalhousie Law School, 2005), with some minor revisions) A NOTE ON PENSION DIVISION IN NOVA SCOTIA Rollie Thompson One spouse's pension is usually the single largest matrimonial asset to be divided, other than the matrimonial home. When the Matrimonial Property Act came into effect in 1980, most lawyers assumed that pensions were matrimonial assets, however complex may be the problems of valuation and division. Then, in 1986, our Court of Appeal surprised everyone in Clarke v. Clarke by ruling that pensions were not "assets" subject to division, a decision reversed in 1990 by the Supreme Court of Canada. For the Court, Wilson J. ruled that pensions were "property" and moreover that pensions were matrimonial assets subject to the presumption of equal division. The Court of Appeal decision caused such surprise that the provincial Pension Benefits Act was amended, effective January 1, 1988, to provide for division of pensions upon marriage breakdown. The Pension Benefits Act is the general provincial statute governing private-sector employment pensions and the management of pension funds, all under the supervision of the Superintendent of Pensions in the Department of Environment and Labour. In effect, s. 61 of the PBA and its accompanying regulations set out a statutory scheme of pension division, while pensions also now fall under the general principles of the MPA. This note is intended to provide an introduction to pension terms, the alternative methods of dealing with pensions in property division and then the specifics of pension division under the Pension Benefits Act and other statutory schemes. 1. Pension Statutes In Canada, pensions are employment-based. Individual employers offer an organised pension plan as an employment benefit, usually with the employer and the employee each making contributions to a pool of funds which are then invested and managed on the employee's behalf. The details of pension regulation are set out in the relevant statute governing the pension plan. As you know from constitutional law, legislative authority over private employment is divided between federal and provincial governments. Similarly, then, regulation of employment pensions is divided. Further, federal and provincial governments have specific detailed statutes governing the public sector pension plans of their own employees or groups of employees. In the case of pensions, the following statutes govern the division between spouses: (1) Provincial, private: Pension Benefits Act, s. 61.

2 VII-2 (2) Provincial, public: Public Service Superannuation Act, Teachers Pension Act (provisions similar to s. 61 PBA). (3) Federal, private: Pension application Benefits Standards of provincial Act law, (which i.e. the in turn Pension directs Benefits the Act). (4) Federal, public: Pension Benefits Division Act (mostly public servants, Armed Forces, RCMP). This simplifies the statutory methods of division available in Nova Scotia, to essentially two in number. For federal public-sector employees, the unique division process of the PBDA is available, while everyone else -- private sector, provincial public sector -- works under the PBA or a parallel scheme. 2. Some Common Pension Terms and Issues In the Best case below, Justice Major explains many of the major pension terms and issues, in slightly more detail. Here you get the cartoon version. Most pensions plans are "contributory", meaning that both employee and employer make "contributions" to the pension fund. Under the most common arrangement, the employer "matches" the employee's contribution, with the employee's contribution made by way of a payroll deduction from his or her wages or salary. In the rarer "non-contributory" plan, only the employer pays into the pension fund. So long as the pension plan is registered with Revenue Canada, the employee contributions can be deducted from income for tax purposes. In a "defined contribution plan", also known as a "money purchase plan", the employer and employee contributions go into a separate investment account, much like an RRSP. When the employee retires, the account is converted into a pension annuity and paid out to the individual employee. Smaller and non-unionised employers are more likely to adopt this approach, which simplifies the management and costing of pensions. A "defined benefit plan" pools the employer and employee contributions, invests the pool of funds and guarantees the employee that a defined future benefit will be paid upon retirement, in an amount defined by a formula using both years of service and average salary. More sophisticated pension management is required for such plans, making such plans more common amongst large or unionised employers. These schemes are discussed at greater length in the Best case, where Mr. Best was a member of the Ontario public-sector Teachers Superannuation plan. After a maximum of two years under the Nova Scotia PBA, "vesting" occurs and the employer and employee contributions are "locked in". Prior to "vesting", if an employee terminates employment, he or she only receives the employee contributions plus interest. After "vesting", an employee becomes entitled to the benefits of both employer and employee contributions, but those contributions are "locked in". By this, we mean that the employee's

3 VII-3 ability to withdraw funds in a lump sum becomes very limited. The employee must await retirement to receive the deferred pension benefit, however small. The "retirement date" is normally at age 65, at which time the pension plan member can begin to receive his or her monthly pension benefit. Ordinarily, retirement before that date results in a significantly reduced monthly pension. Many plans provide for "early retirement" without reduction if an employee's age and years of service add up to 80 or 85 or 90. Of course, if you retire, your income is reduced to the level of whatever pension to which you are entitled. It is up to the individual employee to decide whether or not to take early retirement. Separation and divorce often require the employee to delay any ideas of early retirement and to continue working for the higher employment salary. In these days of downsizing, all kinds of retirement packages are offered to employees to encourage early retirement. "Indexing" has important implications for pension benefits and valuation. Public sector pensions, like Mr. Best's, are usually indexed both before and after retirement. If an employee leaves employment, his or her benefit entitlement will be indexed to the Consumer Price Index until retirement, so that the purchasing power of the pension benefit is maintained. And, after retirement, the monthly benefit continues to be indexed from year to year. Most private sector pension plans are not indexed before retirement, although ad hoc adjustments are often made to benefits as part of the process of collective bargaining. Some plans provide no indexing before retirement, but once the pension is "in pay", the pension is indexed thereafter. It is therefore important to know whether a pension is indexed or not, before or after retirement. "Survivor benefits" provide a pension to the spouse of the pension member in the event the member spouse dies after retirement. Most provinces, including Nova Scotia, require that 60 percent of the member's pension be paid to a surviving spouse for the rest of his or her life. If the pension plan member dies before retirement, there is usually a provision for a lump sum death benefit to be paid to the surviving spouse. Upon divorce, the ex-spouse loses these survivor benefits, being left with whatever pension division is negotiated. Note the terms "member spouse" and "non-member spouse". The member spouse is the term used for the employee who is a member of the pension plan, while non-member spouse refers to the other spouse. Under pension division schemes, the "non-member spouse" may be granted certain statutory rights of limited membership, including regular information, much like the member spouse. The spouses will deal with the "plan administrator", the individual or company that must be designated as responsible for the management of the pension plan under the supervision of the Superintendent of Pensions. The Best case explores a number of other pension issues specific to the valuation and division of pensions. Common methods of valuation are called the "termination method" or the "retirement method" or the "hybrid termination/retirement method" -- be careful what meaning the actuary gives to these labels. An "actuary" is a professional specialised in the mathematics of pensions, benefits and damages. Actuaries are engaged in the design, management and valuation of pension plans for employers, plan administrators and spouses engaged in family law litigation. If a pension has to be valued for purposes of division, one party's lawyer will have to

4 VII-4 retain an actuary to do a report valuing the member spouse's pension interest, using various assumptions. The other issue that arose in Best was how to allocate the value of that pension as between the years of marriage and the years of pensionable service outside of marriage, namely the "value-added" method vs. the "pro rata on service" method. 3. Dividing Pensions as Family Property There are a number of alternative methods to treat pensions as part of the family property to be divided between spouses. In this section, those alternatives will be considered, before more detailed consideration of the two commonly-used statutory schemes, under the PBA and the PBDA. Only in some instances will it be necessary to retain an actuary to value the pension plan. (1) Division In Specie. In some modern marriages, both spouses will have pension plans. If the disparity in salaries and years of service is not great, the spouses may choose to retain their respective pension entitlements and release their interest in the other's pension. This approach avoids the need to value a pension or to split either pension. This would be an uncommon case, most likely one of younger spouses, with no children and no ongoing spousal support. (2) Statutory Division. Under Nova Scotia case law, the presumed method of division will be the statutory scheme under the Pension Benefit Act (or now the Pension Benefits Division Act), if the parties cannot agree or if there is no evidence to support any other method of division: see Ray v. Ray (1993), 121 N.S.R. (2d) 340 (S.C.) and Robski v. Robski (1997), 166 N.S.R. (2d) 161 (S.C.). The statutes provide the "default" method of pension division, used in most cases. The pension plan administrator actually divides the pension as directed by the legislation, of which more below. (3) Asset Trade-off. In some cases, there are sufficient non-pension assets available to allow the possibility of an asset trade-off. Under this method, the member spouse's interest in the pension has to be valued by an actuary. The value of the pension can then be included in the balance sheet and "traded-off" in the over-all division of property, with the member spouse retaining the pension as "his" or "her" asset. Most often, the trade-off suggested is that a wife keep the equity in the matrimonial home -- the other "big" asset -- while the husband keeps his pension. The non-member spouse releases any interest in the member's pension as part of the division. There are some risks with this method, most notably the potential for double dipping through spousal support, an issued dealt with by the Supreme Court of Canada in Boston. (4) Permanent Maintenance. If a pension is already "in pay" or will soon be in pay, then another alternative provides for the member spouse to keep receiving the pension income, but pay "permanent maintenance" or "support" to the other spouse, usually the wife. In a long marriage, the amount would be 50 percent of the pension, for example. The payment of spousal support is deductible for tax purposes by the member spouse and includible in income for the non-member spouse. Apart from this tax advantage, the member spouse also gets to keep the full pension in the event the non-member spouse dies thereafter. The non-member spouse can

5 VII-5 enforce payment by means of the applicable maintenance enforcement legislation, like our Maintenance Enforcement Act. Life insurance is essential to this approach, so that the nonmember spouse receives a suitable lump sum upon the death of the member spouse to replace the "permanent maintenance". (5) Clarke-Style Division under the MPA. Under Clarke, a pension can still be divided under the Matrimonial Property Act, despite the intervening passage of s. 61 of the Pension Benefits Act or the Pension Benefits Division Act. Section 60(4) of the Pension Benefits Regulations specifically maintains the MPA method of division. It is rarely employed in Nova Scotia, but may experience a resurgence of interest after the 2004 Morash decision. This is the "if-and-when" division referred to in Best, whereby the member spouse is obliged by court order to pay over the non-member spouse's share to the non-member out of each pension cheque. (Keep in mind that Ontario is now the only Canadian province with no form of statutory pension division whatsoever.) In some cases, plan administrators will honour such orders by paying direct to the non-member as a matter of convenience. You can see that enforcement problems can arise with this method. But there may be other advantages. An unequal division, of more than 50 percent, could be awarded to the non-member spouse. Further, the pre-marital portion of the pension may be divided under the MPA. Under the MPA division, the member spouse retains full rights to the pension, unlike under a PBA division, so that the member spouse can retain a full pension after the death of the non-member spouse. But the death of the member spouse can pose serious problems for the non-member spouse, who would thus demand a variety of other guarantees in order to use this method. Age and health differences between spouses can make this alternative more attractive than the PBA. 4. The Pension Benefits Act Section 61 of the Pension Benefits Act first came into force on January 1, 1988, allowing for a statutory scheme of pension division. Under this scheme, the non-member spouse could receive what is called a "deferred benefit split". When the member spouse retired from a defined benefit plan, two cheques would be issued each month by the plan administrator, one for the member spouse and a second for the non-member spouse, as directed by a Supreme Court order. Effective June 4, 2001, significant changes were made to the pension division scheme under the PBA, with s. 61 stripped down and most of the important provisions now found in Part II of the Pension Benefits Regulations, under the heading, Division of Pension Entitlement. Read section 61 of the Act and ss. 58 to 73 of the Regulations in the Statutory Supplement as you work through this part of the note. (1) Common-Law and Same-Sex Partners. PBA division was previously available to legally-married spouses, and also to common-law spouses who had cohabited for three years or more. With the most recent PBA amendments in the Law Reform (2000) Act, the term common-law partner has been inserted, to include both common-law and same-sex couples, provided they have cohabited in a conjugal relationship for a period of at least two years, neither of them being a spouse : s. 2(ga) PBA.

6 VII-6 (2) Pension Information. A spouse or common-law partner who claims an interest in a pension may submit Form 5 to the plan administrator, Request by Spouse or Common-Law Partner for Information Respecting Member s or Former Member s Pension or Pension Benefit. The information must be provided within sixty days and may include any information necessary to value the member s or former member s pension or pension benefit : s. 61 PBR. (3) Triggering Events. Section 61 of the PBA specifies the triggering events, which give rise to the right to seek division of a pension, the same events as those found in s. 12 of the Matrimonial Property Act: a petition for divorce, application for nullity, or irreconciliable separation. (4) By Court Order or Separation Agreement. Under the PBA, pension benefits can be divided by an order of the Supreme Court, or also now by a written separation agreement as provided in s. 60(1) of the Pension Benefits Regulations (or PBR). If the court order method is used, a court order separate from the corollary relief judgment is prepared, as part of the divorce proceeding. The order or agreement must be provided to the plan administrator, along with Form 6, Request for Designation as Limited Member of Pension Plan : s. 61(2) PBR. (5) Defined Contribution Plans. A non-member spouse now has two options for the divison of such plans: (i) become a limited member of the plan, with a pension to begin payment when the limited member reaches retirement age; or (ii) ask for a proportionate lump sum to be immediately transferred out of the plan and into a locked-in RRSP or similar vehicle: ss. 64, 69 PBR. (6) Deferred Benefit Split for Defined Benefit Plans. The new Regulations retain the deferred benefit split for defined benefit plans as the principal, but not the sole method of division. The payment of pension benefits to the non-member, or now limited member, begins when the member spouse retires and commences receiving his or her pension (or the member's normal retirement date): ss. 65 PBR. It is the member s decision when to retire and that will affect the timing of the non-member s pension commencement. As s. 66(2) PBR makes clear, the plan must deduct separate source deductions for tax, from each separate pension. (7) Transfer Out of Lump Sum. Before the most recent amendments, the PBA only permitted a lump-sum transfer out of a defined benefit plan in one situation, namely where the member spouse left employment and terminated his or her membership in the plan. That option is retained under the amendments in s. 64(4)(b) PBR, but another, more important exception has been added in s. 64(4)(a) PBR. When the member retires, the non-member spouse or commonlaw partner can now request a transfer out of a lump sum, the proportionate share of the commuted value of the pension benefit as it is called, and into another retirement vehicle, e.g. another pension plan, an RRSP, a life income fund (LIF), or a life annuity. In most cases, the non-member will be better off remaining a member of the defined benefit plan and receiving their benefit split, but this lump-sum transfer provision accommodates those non-members for whom there are better or preferable alternatives.

7 VII-7 (8) Pension in Pay. Until the most recent amendments, the Superintendent had taken the position that a pension once "in pay" after retirement could not be divided under the statute, despite the rejection of that interpretation in Cattran v. Cattran (1993) below. Section 61(1) of the Act now makes clear that a pension benefit or a pension can be divided. What this means is that a couple that separates after retirement, when one of them is already receiving a pension, can still have their pension divided at this stage, with the non-member receiving a pension and the member s monthly cheque accordingly reduced. (9) Proportionate Share. Whether dividing a defined contribution plan or a defined benefit plan, there must be some method for determining the non-member s proportionate share of the pension. The Regulations adopt the pro-rata on service method of allocation, the same method explained below by the Supreme Court in Best v. Best: ss. 69, 70 PBR. To determine that proportionate share, the period of pensionable service during the marriage or partnership, typically calculated in months, is divided by the member s total period of pensionable service, which may include a period prior to the marriage or partnership or a period after separation or both. For example, if a member starts in a plan in 1980, gets married in 1985, then they separate in 1995, and the member then retires in 2000, and the marital pension is to be divided equally, the non-member (or limited member) will receive a proportionate share of one-half of 10/20 of the pension, i.e. 25 percent of the total pension. There is a ceiling on the proportionate share under the PBA, namely the non-member cannot obtain more than 50 percent of the pension or pension benefit earned during the marriage or cohabitation of common-law partners : s. 61(2) PBA. For common-law partners, there may be some dispute about the period of cohabitation. If a married couple cohabited before marriage, that period will be added in to the numerator. Ordinarily, the date of separation will be the end-point for determining the pension benefit earned during the marriage, as was explained in Simmons, above. But the term used in the Regulations for that end-point is the entitlement date, which in the case of a married couple could conceivably extend right up to the date of trial or even final divorce. (10) Calculating the Division in a Defined Benefit Plan. The single most signficant change in the Pension Benefit Regulations is buried in the interaction between ss. 66 and 70 PBR, a change not immediately apparent to most lawyers. Under the old Regulations, the pension benefits accrued during the spousal relationship "shall be determined as if the member terminated employment at the valuation date in accordance with the terms of the plan at that date and without consideration of future benefits, salary or changes to the plan but with consideration for the possibility of future vesting". In effect, this prescribed the "termination method" to determine the value of the pension cheque to be paid to the non-member spouse, a conservative approach that favoured the member spouse. It meant that the value of the pension to be divided used, for example, the last five years average salary just prior to the separation and only the years of pensionable service to the separation date, even though the member spouse might work for years after that, even right to retirement for the same employer, with a salary that continued to rise right up to the date of retirement.

8 VII-8 Under the new Regulations, what is divided is no longer the pension amount that would have been paid as if the member spouse had ceased employment at the date of separation, but a pro rata share of the pension amount actually received on retirement by the member spouse. So, even though a couple splits up twenty years before retirement, the non-member spouse will share in the higher pension amount obtained by reason of the next twenty years of service, any improvements in the pension plan during that time, as well as the increase in the pension that will derive from the member s post-separation salary improvements, promotions, etc. This method of calculating the division is known as the Rutherford formula based upon a B.C. case of that name, a formula subsequently entrenched in B.C. s Family Relations Act. Critics say that this formula is too favourable to the non-member, allowing him or her to benefit from postseparation contributions and changes, contrary to the philosophy of family property division. There is one adjustment that can be made to divide a defined benefit. Because the nonmember (or limited member) receives a pension for the rest of the non-member s life, the plan is permitted to adjust actuarially the monthly amount to be paid, to reflect the longer or shorter life expectancy of the non-member, based on differences in age: ss. 65(c) PBR. For example, a younger spouse or partner will have the monthly pension reduced to reflect the need to pay that pension for a longer period of time. (11) The Impact of Death Upon Division. Once the pension has been split, the pension is paid to the non-member spouse or partner for the duration of her or his life, so that the nonmember's pension is unaffected by the death after retirement of the member spouse: s. 66(1) PBR. Equally, once the division has been ordered or agreed, the death after retirement of the non-member does not affect, i.e. increase, the amount of pension paid to the member. Section 67 PBR addresses death before retirement. If the member dies before retirement, plans pay a pre-retirement death benefit. A typical lump-sum death benefit would be an amount equal to two times the member s contributions plus interest, reflecting an estimate of the employee and matching employer contributions to the plan. If a pension has been divided, then the member s estate or beneficiary will receive the proportionate share of the death benefit, as will a limited member if the limited member dies before retirement. If the non-member spouse or partner has taken a lump-sum transfer out of the plan, deciding not to become a limited member, then there is no right to any death benefit. (12) Adminstrative Fees. Note that plan administrators can now charge fees, subject to maximums, for various pension division costs, e.g. to a maximum of $500 to divide a defined benefit pension: s. 73 PBR. Parallel provisions to s. 61 PBA are found in the public sector legislation: Public Service Superannuation Act, R.S.N.S. 1989, c. 377, s. 27; and Teachers' Pension Act, R.S.N.S. 1989, c. 461, s. 48. Each plan requires a slightly different form of order. 5. The Pension Benefits Standards Act

9 VII-9 This federal statute governs private sector pensions under federal legislative jurisdiction, e.g. banks, MTT, airlines, shipping. The provisions governing division applied effective January 1, By reason of s. 25(2), "provincial property law" applies to the division of pensions, thereby making the Nova Scotia Pension Benefits Act apply, including its spousal definitions. For the most part, PBA practices are followed by lawyers and judges. 6. The Pension Benefits Division Act This federal statute became effective on September 30, 1994, finally providing a vehicle for the division of the pensions of federal public service employees, members of the Canadian Armed Forces and members of the RCMP. Division is available to legally-married spouses, and common-law partners, both opposite-sex and same-sex, who have cohabited for at least one year: s. 2. Applications for division are to be made upon divorce or within one year of separation: s. 4(2). Division can be effected by court order or written spousal agreement: s. 4(2). No more than 50 percent of the "value of pension benefits" can be transferred to the non-member spouse: s. 8(1)(a). The relevant "period subject to division" is the period specified in the court order or the period of cohabitation stated in the agreement: s. 8(2). Pre-marital or pre-cohabitation periods may be included in a court order. The division is effected, not by a deferred benefit split, but by lump-sum payment out of the plan into the non-member spouse's locked-in pension plan, RRSP or life annuity: s. 8(1)(a). The precise amount is calculated by the federal authorities and made available to the parties. Actuaries will tell you that this federal calculation is not the same as a pension valuation, given the standardized methods employed by the federal authorities. An individualized valuation by an actuary will often provide very different values and it may be wise to have a valuation prepared in these cases, just to be sure. In allocating value between marital and non-marital periods, the pro-rata on service method is employed by the feds. 7. Canada Pension Plan Credit-Splitting In Nova Scotia, the spouses cannot bar credit-splitting by agreement and a standard term to that effect is included in the Divorce Judgment. For divorces after January 1, 1986, no formal application for credit-splitting is required. Forms are sent out automatically to all divorced spouses and there is no limitation period for the forms to be filed. If no forms are filed, then no division takes place. Credit-splitting is also available upon separation, provided that the parties have cohabited for at least one year and have been separated for one year. For division between married spouses upon separation, an application is required, but there is still no limitation period for the application to be filed. Credit-splitting can also take place between common-law partners, of the opposite or

10 VII-10 same sex, provided that the parties cohabited for at least one year and have been separated for one year. An application is required and it must be filed within four years after separation. The calculations are very complex, but are completed by the CPP authorities. It is essential that lawyers inform clients that the forms must be completed and filed to effect the credit split and, in some cases, clients may require the lawyer's assistance in completing the forms. A Note on the Practical Implications of Morash Rollie Thompson Morash has significant practical implications for Nova Scotia family law lawyers, implications discussed at greater length in Thompson, "Annotation: Morash v. Morash" (2004), 48 R.F.L. (5 th ) 312. (1) The Need to Value the Pre-marital Portion of the Pension Until Morash, most Nova Scotia family law lawyers thought that a division under the PBA was the end of the matter, effectively taking the pension "off the balance sheet" for property division and avoiding any need for valuation of the pension. Now, the pre-marital service must be treated as a "matrimonial asset", but the PBA cannot be used to divide this premarital portion, given the "maximum entitlement" provision of s. 61(2) and the scheme set out in Part II of the Pension Benefits Regulations. The careful lawyer for the non-member spouse will now have to advise the client on the wisdom of obtaining an actuarial valuation of the premarital portion of the pension, in order to establish a value for purposes of the MPA equal division. Valuing the pre-marital portion will effectively require a complete valuation, especially given the "pro-rata on service" approach to apportionment mandated by Best v. Best. Until Morash, apart from asset trade-offs, there was little need to retain actuaries in most cases, thanks to the PBA. Now, an actuary (or two, as in Ontario) will be needed in every case where there is any significant period of service before the marriage. A written waiver may be necessary when the client decides not to retain an actuary for that purpose. (2) The Important Remedial Question In Morash, at para. 33, the Court just declares: "Mrs. Morash is entitled to an equal share of the pension credits earned prior to the marriage." No mention is made of how that is to be accomplished. The maximum entitlement provision of s. 61(2) bars the use of the PBA to effect the division. We are left with two options: (i) an asset trade-off, possible for the Morashes, given the size of their assets; or (ii) an "if-and-when" trust order for the balance, imposing a trust upon the share of the post-pba-split pension in the hands of Mr. Morash, although such orders are now in further disrepute after Best. Some form of continuing equalization payment may be the only solution.

11 (3) What About Common-Law Partners? VII-11 Where does the "PBA-as-mechanism" interpretation leave common-law partners? Up until Morash, as with married spouses, there was an assumption of equal entitlement to any pension benefit earned during the period of cohabitation, thanks to the PBA. That advice is no longer be valid now, as common-law partners may have to look elsewhere for "entitlement", to the law of unjust enrichment and constructive trust: Brownie v. Hoganson, [2005] N.S.J. No. 470, 2005 NSSC 314 (S.C.F.D.). The Matrimonial Property Act is not available for these couples after the Supreme Court of Canada decision in Walsh v. Bona. And, as you will see, after Walsh, the law of constructive trust may have become even less hospitable and no more predictable: see, e.g., Wylie v. Leclair (2003), 64 O.R. (3d) 782 (Ont.C.A.). Pension rights for common-law partners may now have to be secured by cohabitation agreement, to ensure entitlement. (4) The Best of All Possible Worlds for Non-Member Spouses? Member spouses in Nova Scotia may now get it both coming and going. After the 2001 Pension Benefit Regulations, the member spouse's post-separation promotions, income increases and benefit improvements will all be subject to pro-rata division thanks to the new division formula. Unfortunately, the Court of Appeal showed no appreciation of the significance of these 2001 changes. After Morash, the pre-marital portion of the pension, not divisible under the PBA, will now also be divided equally under the MPA. Non-member spouses now have the best of all possible worlds. (5) More Claims for Unequal Division The result of Morash will be more claims for unequal division by member spouses, which will be resisted by non-member spouses. Somewhere between the presumption of equal division in long marriage cases like Morash and the exclusion of all pre-marital service in short, second, childless marriage cases like Connolly, there is a lot of room for litigation by parties and, I suspect, for much more judicial unpredictability in the resort to unequal division. (6) The Early Post-Morash Case Law The Nova Scotia courts are still grappling with the implications of Morash. In none of these cases did the court have any actuarial evidence of the value of the pre-marital portion of the pension. Some parties avoided the whole issue by just agreeing to a straight statutory split of the period of cohabitation and marriage: Gardner v. Gardner, [2005] N.S.J. No. 147, 2005 NSSF 17 (S.C.F.D.) at para. 27 (PBDA split); Anderson v. Anderson, [2005] N.S.J. No. 176, 2005 NSSC 94 (S.C.) at para. 116 (wife only sought PBA split, recognized by Warner J. as a reduced claim). In one case, the Court just ordered a split of the full Pipefitters pension, including the pre-marital portion of three years (plus nine years of marriage), without any indication of how that might be accomplished: Garand v. Garand, [2005] N.S.J. No. 214, 2005 NSSC 136

12 (S.C.F.D.) at para. 16. VII-12 In two shorter marriage cases, the courts effected an unequal division under s. 13, thus excluding all of the pre-marital portion of the pension from division: Skipton v. Skipton, [2004] N.S.J. No. 83, 2005 NSSC 43 (S.C.) at paras (22 years in military, only 9 during second marriage, father had paid equalization to first wife, but had not received any child support from her for the four children); Lewis v. Lewis, [2004] N.S.J. No. 511, 2004 NSSC 251 (S.C.) (both military spouses with pensions, most service before marriage, marriage only 4 years). In another case, there was no actuarial evidence of the value of the pre-marital portion of a military pension, consisting of three years of service before a twenty-year traditional marriage. Justice Warner made his best estimate of its value at $32,000 and included that amount in the balance sheet, to be divided equally in addition to the division under the PBDA. See Rutherford v. Rutherford, [2004] N.S.J. No. 291, 2004 NSSC 148 (S.C.).