New Marriage Breakdown Rules Post-2011

Transcription

1 New Marriage Breakdown Rules Post-0 The information in this document applies if your court order, family arbitration award or domestic contract was made on or after January, 0. (A separation agreement is a form of domestic contract.) The legislative reforms that come into force on January, 0 introduce two key changes that apply in the event of marriage breakdown: The new rules introduce a new method for valuing a pension for family law purposes. The same value is used for both the equalization of net family property under the Ontario Family Law Act (FLA) and the division of pensions under the Ontario Pension Benefits Act (PBA). The valuation is performed by the plan administrator (such as OMERS). In the past, either party would have had to pay for the services of an independent actuary to determine this value. An eligible applicant (see Step below) may apply to OMERS for an immediate settlement of a portion of the Family Law Value, even if the member is active or deferred. Under the new rules, an eligible applicant may apply to OMERS using a specific Financial Services Commission of Ontario (FSCO) form for a valuation called the Family Law Value (FLV) on the FSCO forms. OMERS will calculate the FLV of the defined benefit provision of the OMERS Primary Pension Plan (the Plan) and provide the member and former spouse each with a Statement of Family Law Value (Statement of FLV). Once the parties receive the Statement of FLV, they can decide if they wish to divide the member s pension benefit as part of the equalization of net family property, and if they decide to do so, the former spouse can apply to OMERS using another FSCO form and also send the required supporting documentation. Forms Starting on January, 0, the FSCO forms must be used to apply to OMERS for a valuation of the member s pension benefit, and if further steps are taken, to apply for a transfer of a portion of the FLV or a division of the member s pension. It is important for eligible applicants to complete and submit the appropriate FSCO forms to OMERS letters, phone calls or other requests will not be accepted to initiate this process. OMERS must also use specific FSCO forms to communicate with members and their former spouses. Please visit under Pensions > Family Law Forms to obtain the FSCO forms and detailed instructions.

2 A Four-Step Application Process The steps set out on the following pages will help the parties to apply to OMERS for a Statement of FLV under the defined benefit provision of the Plan and, if applicable, apply for a transfer of a portion of the FLV or a division of the member s pension. STEP Application for Family Law Value (FLV) Form STEP OMERS calculates and reports a Statement of Family Law Value (FLV) Form 4 STEP 3 Member and former spouse decide whether to divide the pension and former spouse applies to administrator STEP 4 Application for Transfer or Division from the Plan Form 5 or Form 6

3 STEP Application for Family Law Value (FLV) Form In Step, an eligible applicant asks OMERS to provide a Statement of FLV for the member s pension benefit based on the Family Law Valuation Date (FLV Date) indicated on the application form and the period that the parties were spouses. Q: Who can make an application for an FLV? A: An eligible applicant includes: A member of the Plan who is active, deferred or retired at the FLV date. A former spouse of the member (only legal marriage, not common-law relationship). An eligible applicant does not include a common-law spouse of a member. In this case, the member must apply. This limitation is part of the legislation. Q: What FSCO form is used? A: Form - Application for Family Law Value Q: Is there a fee? A: The first Statement of FLV issued to you or your spouse on or after March, 05 will be provided at no cost any subsequent requests made by you or your spouse will cost $600 per statement. If you have more than one membership in the OMERS Plan, you or your spouse are still only entitled to one Statement of FLV. If you request a Statement of FLV for more than one date, the first statement issued will be provided at no cost. The Statement of FLV for the second date would cost $600. If you and your spouse are both members of the OMERS Plan, both you and your spouse are entitled to one free Statement of FLV in respect to your individual memberships. Please make the cheque payable to OMERS Administration Corporation. 3

4 Q: When will OMERS send the Statement of FLV? A: Within 60 days of OMERS receiving a complete application. (Applications are processed on a first-come, first-served basis.) If information is missing, OMERS will contact the applicant directly, or the designated contact person (according to Form 3). OMERS cannot process statements for a future FLV Date, i.e., OMERS can only process statements after the FLV Date has occurred. Important: When scheduling court dates or other meetings, keep in mind the 60-day processing time. Optional Forms Optional forms in Step include Form - Joint Declaration of Period of Spousal Relationship and Form 3 - Contact Person Authorization. Please visit for more information about these forms. Completing Form To help you complete Part B of Form, the applicable Plan information is set out below. Name of Pension Plan Pension Plan OMERS Primary Pension Plan Pension Plan Registration Number Name of Employer/Union/Professional Association Plan Administrator OMERS Administration Corporation Mailing Address of Plan Administrator (Street Number and Name) One University Avenue Suite/Floor No. Suite 400 City Toronto Telephone Number Province Ontario Fax Number Postal Code M5J P Website Address (If Available) omers.com 4

5 STEP OMERS calculates and reports a Statement of Family Law Value (FLV) Form 4 The Statement of FLV is a prescribed FSCO form that provides the FLV and other information about the member s pension to both parties. Q: Who calculates the FLV? A: OMERS will perform the prescribed calculations and prepare the Statement of FLV. Q: Who receives a copy of the Statement of FLV? A: Both the member and the former spouse (married or common law) will be sent a copy, regardless of who applied. This is a requirement of the new rules. If either spouse has assigned a contact person (by completing Form 3), only the contact person will be sent the statement. Q: What FSCO form is used? A: The version of Form 4 (B, D, or E) that OMERS sends will depend on the member s status at the FLV Date. Note: If you are a dual member (i.e., you have more than one OMERS membership), you will receive one Statement of FLV for each membership record. Q: Does the reported FLV include all OMERS benefits? A: No. The FLV does not include benefits under the Retirement Compensation Arrangement (RCA) for the OMERS Primary Pension Plan or the member s account value as at FLV Date under the Additional Voluntary Contribution (AVC) provision of the Plan. More specifically: The RCA is not governed by the PBA. As a result, it is not reported in the Form 4. See the information under "Retirement Compensation Arrangement (RCA)" following Step 4 in this document. Members with an RCA benefit on the FLV Date can also contact OMERS for more information. Information on a member's AVC account, if any, is reported on the Form 4. AVCs are not reported as part of the FLV. See the information under "Additional Voluntary Contribution (AVC) Provision" following Step 4 in this document. 5

6 Q: Are there rules that limit the amount of the FLV that is payable to the former spouse if the parties decide to transfer or divide the member s pension? A: Yes. OMERS cannot administer a payment (transfer or division of pension) from the defined benefit provision of the Plan that is more than 50% of the FLV reported in the Form 4 (updated with interest until the settlement month). The 50% limit applies per membership (for dual members). Also, for transfers, OMERS cannot administer a full lump-sum transfer settlement contemplated in a marriage breakdown document if all of the funds have already been from paid the plan. If partial benefits have been paid, OMERS will not be able to include the spousal portion of benefits already paid in the transfer either. 6

7 STEP 3 Member and former spouse decide whether to divide the pension and former spouse applies to administrator Q: Who is involved? A: The member and his/her former spouse. Q: What FSCO form is used? A: There is no Form for this Step. Form 4 from Step will be a helpful reference. The provision setting out the treatment of the pension amounts from the Plan, if any, must be clearly set out in the applicable marriage breakdown document (court order, family arbitration award or domestic contract). Q: If we are asking OMERS to split the member s pension, do we need to specify certain information in the applicable marriage breakdown document? A: Yes. As specified in the governing law, the applicable marriage breakdown document must indicate: the FLV Date that matches the date on the Form 4 Statement; and a division of the pension benefit expressed as either a specified amount or a percentage of the FLV reported on the Form 4. For dual members The specified amount or percentage in the applicable marriage breakdown document must be set out for each membership separately. Important: This information is key to having a complete application as noted in step 4. Q: What if the parties wish to address the member s AVCs or RCA benefit? A: AVCs: A member s AVC account, if any, does not form part of the FLV. As a result, AVCs must be addressed separately in the applicable marriage breakdown document. See the information under Additional Voluntary Contribution (AVC) Provision following Step 4 in this document. RCA: A member s RCA benefits, if any, do not form part of the FLV. As a result, the RCA must be addressed separately in the applicable marriage breakdown document. See the information under Retirement Compensation Arrangement (RCA) following Step 4 in this document. 7

8 STEP 4 Application for Transfer or Division from the Plan Form 5 or Form 6 If the applicable marriage breakdown document involves a transfer or division from the defined benefit provision of the Plan, the FSCO Form 5 or Form 6 (see below) must be sent to OMERS with complete accompanying documents. The method of dividing the defined benefit provision of the OMERS Plan depends on the member s status at the FLV Date: If the member s status is active or deferred at the FLV Date, the former spouse may apply for an immediate settlement (a lump sum) from the defined benefit provision of the Plan. If the member is retired at the FLV Date, the former spouse may apply to OMERS to divide the member s ongoing pension payments. Q: Who is involved? A: The former spouse completes a Form 5 or Form 6 and submits it to OMERS. Q: What FSCO form is used? A: One of two forms may be used depending on the member s status on the FLV Date: If the member was active or deferred at the FLV Date, the former spouse completes the Application to Transfer the Family Law Value Form 5. If the member was retired at the FLV Date, the former spouse completes the Application to Divide a Retired Member s Pension Form 6. (Refer to your Form 4 Statement, which indicates the status.) Q: Can I send in a Form 5 or 6 if I do not have a Form 4? A: No. A Statement of FLV (Form 4) must be obtained first. Q: If I am a dual member, what needs to be specified in Form 5 or 6, as applicable? A: For dual members, OMERS requests that the documents refer to an amount or percentage per membership. As previously indicated, OMERS cannot administer an amount from the defined benefit provision of the Plan that is more than 50% of the FLV (per membership). Q: When will OMERS perform the transfer or division? A: Within 60 days of OMERS receiving a complete application. 8

9 Additional Voluntary Contribution (AVC) Provision As previously noted, the FLV set out in Form 4 does not include the value of a member s AVC account under the AVC provision of the Plan. However, information about a member s AVC account as of the FLV Date must be reported on the Form 4. This information is available for the parties to use in the equalization of net family property. If a member wishes to use funds from their AVC account for marriage breakdown purposes, the member can withdraw up to 50% of their AVC account balance determined as of the FLV Date. This withdrawal can be made at any time during the year and is subject to the applicable rules for the AVC provision of the Plan (e.g., locked-in amounts can be transferred only to another locked-in account). Before such a withdrawal can be made, the member will have to establish that the funds are required for an equalization payment (e.g., provide OMERS with a copy of a court order, family arbitration award or domestic contract that contains appropriate language). Please note that OMERS does not transfer funds directly from a member s AVC account to a former spouse, so any payment must be made initially to the member and then the member must arrange the transfer to the former spouse. Retirement Compensation Arrangement (RCA) The RCA provides benefits for contributory earnings that exceed the defined benefit limits for registered pension plans under the Income Tax Act and Income Tax Regulation. The RCA is not governed under the PBA, so it is not included in the FLV or reported on the Form 4 Statement. A FSCO Form (Application for a Statement of FLV) will not generate a valuation related to the RCA benefit, if any, calculated as at the FLV Date. A member may contact OMERS for an RCA pension estimate as at the FLV Date. With the consent of the member, OMERS will also provide the estimate to the member s former spouse. The amount is an RCA benefit estimate only the member or the former spouse will have to obtain their own independent valuation of the RCA benefit. OMERS does not make any payment from the RCA to a person other than to the member (or his/her survivors). Therefore, the RCA benefit cannot be split at source similar to the defined benefit provision of the Plan. It will be the responsibility of the member to pay their former spouse to complete any split of the member s RCA benefit. (Published March 05) OMERS One University Ave., Suite 400, Toronto, ON M5J P t omers.com 9