Project Overview
The LCO’s Final Report on the Division of Pensions on Marriage Breakdown (2008) was Ontario’s first independent, comprehensive review of how pensions should be treated when couples separate or divorce. At the time, the law was confusing and inconsistent, and many families—especially those for whom a pension was the most valuable asset—faced significant uncertainty about how to divide it fairly.
Beginning in early 2008, the LCO released a consultation paper, gathered submissions from more than twenty organizations and individuals, and conducted targeted research before issuing its final recommendations. The project examined how pensions should be classified under Ontario’s Family Law Act (FLA), how their value should be calculated, and how to handle situations where one spouse’s pension was the primary family asset. It also considered long-standing issues such as the risk of counting pension income twice in support and property calculations (“double dipping”), gender impacts, and the problem of valuing pension rights that may not vest for many years.
The LCO’s work contributed directly to major legislative reforms. In 2009, the Ontario government amended the Family Law Act and the Pension Benefits Act—changes that adopted many of the LCO’s proposals and created a clearer, more workable system for dividing pensions on marriage breakdown.
Key Recommendations
The LCO made 13 recommendations aimed at providing a fair, transparent, and administratively workable pension division regime. Key reforms included:
1. Clarifying what counts as family property
- Treat both vested and not-yet-vested pension rights as family property under the Family Law Act.
- Ensure pensions are included in the equalization process just like other major assets.
2. Improving how pensions are valued
- Use a consistent valuation method that reflects both the current and future value of a defined benefit pension.
- Provide clear rules so families, lawyers, and plan administrators understand how pension values are calculated at separation.
3. Offering practical options for dividing pension assets
- Allow spouses to transfer a fair share of the pension’s value at the time of separation, using regulated retirement savings vehicles.
- Permit, in some cases, the division of the pension at the time of retirement, with safeguards to ensure each spouse receives the correct share.
- Apply these options across a wide range of pension plan types and allow administrators to rely on standardized forms and charge reasonable fees.
4. Supporting fairness, consistency, and long-term flexibility
- Consider creating a provincial retirement fund for spouses receiving pension transfers.
- Permit spouses to waive CPP credit splitting if they choose.
- Allow separating common-law partners to use the same pension-division rules if both parties agree.
These reforms helped create a clearer, more predictable, and more equitable framework for families dividing pensions—an area that had long been one of the most complex parts of Ontario family law.