When married or non-married parties end their relationship, they may decide to commence a claim for the division of family property under the Family Property Act. Assets that have accumulated during the marriage, or relationship of interdependence, will typically be distributed equally between the parties. This property division will almost always include the division of pension assets.
Beginning April 1, 2020, the rules for calculating pension entitlements for each party will change for pension holders under the Local Authorities Pension Plan, Public Service Pension Plan, and Special Forces Pension Plan. The new rule changes introduced by the Alberta Government under Bill 22 could have a significant impact on the way pension assets are distributed between parties.
Currently, the relevant value for pension distribution is the "commuted value." In essence, the commuted value is a forecasted value that estimates the pension obligation owed to a pension holder based on certain factors such as age, life expectancy, gender, interest rates, etc.
The new rules will see a shift away from the use of the commuted value approach. The value used after April 1, 2020, will be the actual value of the pension at the time that the parties divide the pension assets. This rule change implies that the future value of a pension is not subject to distribution as it was previously. This change could result in a significant benefit for some pension earners while having a negative impact on the former spouses of pension earners.
The bottom line is that parties must be aware of their rights and entitlements with respect to pension distribution in the family law context. Failing to recognize the impact of these rule changes could mean a very different end result for parties during family law property negotiations and settlement than what was expected.
While the full impact of the rule changes under Bill 22 are still unknown, parties should discuss these matters with their lawyers to ensure that they are receiving an equitable division of the family property. At Family Central Law Office, we would be happy to work with you to ensure that your property interests are protected.
Kindly contact us today for your free 20-30 minute consultation on your matter by calling our office at: 587-392-7970 or emailing firstname.lastname@example.org, or our consultation page directly on our website so we can get back to you within 24 hours of contacting us.