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IOL News
03-06-2025
- Business
- IOL News
Divorce and pension interest: essential tips for navigating your rights
Discover essential guidelines for understanding pension interest in divorce proceedings. Learn how to navigate your rights and make informed decisions regarding retirement benefits with expert insights. Image: Stock project The term 'pension interest' arises in divorce proceedings and refers to a notional amount representing the retirement benefit the member spouse would receive from their retirement fund at the date of divorce. Calculating pension interest enables divorcing spouses to share in each other's retirement benefits immediately after divorce rather than waiting until formal retirement. The pension interest calculation takes place at the divorce date, provided the member's spouse is still an active member of the retirement fund at that time. For pension and provident funds, if the member spouse resigns or retires before the divorce date, no pension interest exists, and the benefit accrues solely to the member spouse, thereafter treated as an ordinary asset within the estate. It is crucial to understand that a divorcing spouse's right to claim pension interest depends significantly on the marital property regime: In community of property: Spouses share a single joint estate, and upon divorce, each spouse is entitled to claim 50% of the other's pension interest. Out of community excluding accrual (after 1 November 1984): Each spouse retains their own estate, and there is no automatic claim for pension interest. However, spouses may mutually agree to share pension interest. Out of community excluding accrual (before 1 November 1984): Each spouse maintains their separate estate with no automatic asset sharing, except where a court orders redistribution under Section 7(3) of the Divorce Act. Out of community, including accrual: Pension interest is considered when calculating accrual and shared accordingly. Pension interest calculations differ according to the type of retirement fund: Pension, provident, and preservation funds: Pension interest is the amount the member would have received based on resignation from the fund on the divorce date, as stipulated by the fund's rules. Retirement annuities: Pension interest comprises the total contributions made by the member up to the divorce date , plus simple annual interest calculated at the prescribed rate. Accurate wording of the divorce order is essential to successfully claim pension interest. Ambiguities can cause fund administrators to reject the settlement agreement, leading to costly high-court amendments. Thus, your divorce order must include: Explicit reference to 'pension interest' as defined in the Divorce Act; Clear identification of the specific fund involved; Details outlining exactly how much pension interest is owed to the non-member spouse, including the calculation method; Instructions for the fund to deduct and pay the non-member spouse and to endorse its records accordingly. Once the retirement fund confirms the validity of the divorce order, it must contact the non-member spouse to determine their payment preferences. Available options are either to receive the entire benefit in cash or transfer the benefit into another retirement fund. It is essential to note that the non-member spouse cannot partially withdraw cash when transferring the balance; the choice must be either a full cash withdrawal or a full transfer. Given the potential tax implications of withdrawal, seeking guidance from an experienced financial advisor is strongly recommended to ensure informed decision-making. * Tapfuma is a Certified Financial Planner professional at Crue Invest. PERSONAL FINANCE
Yahoo
25-03-2025
- Yahoo
Family law courts address impact of intimate partner violence in divorce cases
Throughout Canada, judges are being asked to address the impact of intimate partner violence in a separation and divorce. One such pivotal case is the Supreme Court of Canada's ongoing review of Ahluwalia v. Ahluwalia. In this landmark appeal, the court was asked to determine whether a new tort of family violence should be recognized. If established, this tort would allow a former spouse to seek monetary damages for the enduring physical, financial, and psychological consequences of abuse within the family unit. While the Supreme Court's decision in Ahluwalia is still pending, lower courts continue to confront divorce cases involving intimate partner violence. Emerging from those decisions is a clear judicial intention to ensure the impact of family violence is fully addressed in a separation. As in Ahluwalia, courts are crafting important and meaningful remedies. That was the case in a recent decision of the Court of Appeal for Ontario involving a couple who began living together in 2001 and married in 2003. Throughout the relationship, the husband was the primary income earner. After being employed in minimum wage jobs, the wife left the workforce altogether in 2011. The couple had a child in 2018 and separated shortly thereafter. During an 11-day trial before Justice Andrew Pinto of the Superior Court of Justice, the wife recounted how she was physically, verbally and mentally abused by her husband. She gave evidence that her husband threatened to kill her. According to the wife, the abuse caused PTSD and situational depression, intensified her pre-existing OCD symptoms and contributed to her inability to work. Justice Pinto accepted the wife's evidence that the husband was abusive. According to the judge, the husband beat the wife 'over the course of many years' and the wife's 'experience as a victim of family violence made it challenging for her to find employment.' Despite that finding, the judge was critical of the wife's failure to find a job after separation. Justice Pinto concluded the wife 'languished in underemployment' and that her 'complete failure to earn an income is not justified.' In the result, the judge imputed to the wife an annual income of $31,000. On that basis, the husband was not required to pay spousal support. The wife appealed, and on Mar 13 the Court of Appeal released its important decision. The court found that the trial judge's imputation of income to the wife was flawed, as it failed to fully consider the impact of the pattern of abuse on the wife's ability to work. The court emphasized that Justice Pinto had not properly accounted for the consequences of family violence when making his assessment. The decision challenges the interpretation of the federal Divorce Act. That legislation, which applies across the country to divorcing spouses, makes clear that a judge shall not take into consideration any misconduct of a spouse in relation to the marriage when making an order for spousal support. However, the Court of Appeal made an important distinction between the misconduct and its impact. Writing for the Court of Appeal, Justices Steve A. Coroza and Lorne Sossin explained that while the trial judge acknowledged the underlying facts of family violence and their impact, he erred by failing to consider the significance of these findings when imputing income to the wife. Specifically, the trial judge 'failed to grapple with the potential relevance of family violence to the wife's ability to work.' In support of their decision, Justices Coroza and Sossin pointed to Leskun v. Leskun, a 2006 decision of the Supreme Court of Canada, which highlights the 'distinction between the emotional consequences of misconduct and the misconduct itself.' Given that important distinction, the Divorce Act cannot, and does not, operate in a way that prevents a judge from considering the consequences of a spouse's misconduct, including violence. That must be the case since the policy of the Divorce Act is to 'focus on the consequences of the spousal misconduct not the attribution of fault.' The 42% financial hit of divorce and how to recover from it Legal departments expect to gain huge strides with AI Judge awards damages for 'family violence' in landmark case The Court of Appeal reversed the trial judge's decision and substituted a finding that no income should be imputed to the wife. The husband was ordered to pay spousal support to the wife in the amount of $1,453 per month for an indefinite period. This decision marks a significant step in ensuring that family violence is properly addressed in divorce and separation. By acknowledging the long-lasting impact of abuse on a spouse's ability to support themselves, the Court of Appeal has reinforced the principle that the consequences of family violence must be factored into the determination of spousal support. As the legal landscape continues to evolve, there is a growing recognition of the complex and enduring effects of intimate partner violence. Adam N. Black is a partner in the family law group at Torkin Manes LLP in Toronto. Sign in to access your portfolio
