On March 3, 2011, the Ontario government posted draft regulations under Bill 133, the Family Statute Law Amendment Act, 2009, and a related Consultation Paper for public review and comment.

Among other family law-related matters, Bill 133 amends the Pension Benefits Act and creates new rules governing both:

(1) the valuation of pension assets by plan administrators for family law purposes; and

(2) the immediate settlement of the former spouse’s entitlement, either through a lump sum transfer if the marriage breakdown occurs prior to retirement or division of the pension in pay, where there is a court order, family arbitration award or domestic contract awarding a payout from the pension.

The enactment of corresponding regulations is required prior to proclamation of the legislation; these proposed draft regulations specifically outline the majority of the content necessary to implement the new regime, including:

• the prescribed valuation methodology for calculating the “preliminary value” and the “imputed value” to be used for family law purposes;
• exceptions or adjustments to the preliminary valuation, as well as rules for updating the imputed value if the transfer of a lump sum occurs;
• rules governing the process of application for a valuation and settlement of the former spouse’s entitlement, where applicable;
• the required contents of the valuation statement to be provided by plan administrators;
• certain transfer options available to former spouses of active and deferred members entitled to a payout from the pension plan;
• prescribed circumstances that may limit or delay the payout of the former spouse’s entitlement; and
• prescribed rules for adjusting the member's pension if the former spouse’s entitlement is paid out.

The government is actively soliciting feedback with respect to a number of outstanding issues that relate the new Bill 133 pension division regime. These include:

• separate valuation, updating, and adjustment methodology options for “hybrid” plans, including “combination” plans and plans providing a benefit formula containing inter-connected defined benefit (“DB”) and defined contribution (“DC”) benefits;
• amendments to General Regulation 909 under the Pension Benefits Act to account for the option of an immediate transfer of an eligible former spouse’s entitlement to a locked-in account; and
• transfer options setting out rules permitting eligible former spouses to leave his or her lump sum entitlement in the plan to the credit of the former spouse, in prescribed circumstances.

Interested parties and members of the public are invited to comment on the draft regulations and Consultation Paper by April 18, 2011.

We are in the process of reviewing the draft regulations and Consultation Paper, and a more detailed update discussing both will be available shortly on our website.