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Pension Plan Design and the Modern Family: The Equities and Inequities of Pensions as

Pension Plan Design and the Modern Family: The Equities and Inequities of Pensions as Family Property and Spousal Benefits. Anne Slivinskas Associate General Counsel and Director, Pension Law and Policy Group May 23, 2014. Overview. What are the rules?

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Pension Plan Design and the Modern Family: The Equities and Inequities of Pensions as

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  1. Pension Plan Design and the Modern Family: The Equities and Inequities of Pensions as Family Property and Spousal Benefits Anne Slivinskas Associate General Counsel and Director, Pension Law and Policy Group May 23, 2014

  2. Overview • What are the rules? • Do they meet the needs of members and their spouses • Upon separation? • Upon death?

  3. Pensions as Property Ontario’s new rules for pension valuation and division • A single prescribed method for pension valuation; • Settlement options determined by pension status; • Extension of valuation and settlement options to common law spouses.

  4. Pensions as Property:Single Prescribed Valuation • FLA value = PBA value • Calculated by plan administrator, not member’s actuary • Prescribed formula & forms

  5. Pensions as Property: Pension Status on FLV Date Drives Form of Settlement • Immediate lump sum transfer for pre-retirement separations • No need to wait for member's termination, death or retirement • Division of pension payments for post-retirement separations

  6. Pensions as Property: Extension of Valuation and Division Options to Common Law • Married spouses • date of marriage • Married spouses who cohabitated before marriage • date jointly chosen, no earlier than date they moved in and no later than date of marriage • Common law spouses • date jointly chosen, no earlier than date moved in

  7. Death Benefits – What needs are they designed to meet? • Family property? • Spousal support? • Both?

  8. Who is entitled to survivor pension?

  9. When is eligibility tested? • Pre-retirement - Member’s death • Post-retirement –Member’s retirement

  10. Policy Concerns • Date of entitlement determination is arbitrary

  11. Determination of competing claims depends on factual finding of spousal status

  12. Member does not have unilateral control over the death benefit

  13. Proposed Solution: Priority to Designated Beneficiaries and Estates • Remove the spousal priority and allow members to choose a beneficiary for their death benefits with estate as default • Remove joint and survivor pensions as the minimum standard, but allow pensions to be joint and survivor pensions at the election of the member and her or his spouse; • Allow surviving spouses to make a dependent’s claim against the designated beneficiary or the estate, as the case may be.

  14. Anne SlivinskasAssociate General Counsel and Director, Pension Law & Policy Group 416.730.6339 Anne_Slivinskas@otpp.com • 5650 Yonge Street Toronto, OntarioM2M 4H5

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