Bill 31 - An Act to Amend the Pension Benefits Act

BILL 31

An Act to Amend the Pension Benefits Act

Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:

1 Section 1 of the Pension Benefits Act, chapter P-5.1 of the Statutes of New Brunswick, 1987, is amended

(a) in subsection (1)

(i) by repealing the definition “spouse” and substituting the following:

“spouse” means either of two persons who (conjoint)

(a) are married to each other,

(b) are married to each other by a marriage that is voidable and has not been avoided by a declaration of nullity, or

(c) have gone through a form of marriage with each other in good faith that is void and have cohabited within the preceding year;

(ii) in the definition “joint and survivor pension” by striking out “spouse” wherever it appears and substituting “spouse or common-law partner”;

(iii) in paragraph (a) of the definition “optional ancillary benefit” by striking out “spouse” and substituting “spouse or common-law partner”;

(iv) by adding the following definitions in alphabetical order:

“common-law partner” means either of two persons, not being married to each other, who have cohabited (conjoint de fait)

(a) continuously for a period of not less than three years in a conjugal relationship in which one person has been substantially dependent on the other for support, or

(b) in a relationship of some permanence where there is a child born of whom they are the natural parents,

and who have cohabited within the preceding year;

“common-law partnership” means the relationship between two common-law partners; (union de fait)

(b) by repealing subsection (2) and substituting the following:

1(2) If a spouse and a common-law partner both claim a right or a benefit under this Act or the regulations, the spouse is entitled to the right or benefit, if he or she is otherwise eligible, unless there is a valid domestic contract between the member or the former member and the spouse, or a decree, order or judgment of a competent tribunal, that bars the spouse’s claim.

2 Section 27 of the Act is amended

(a) in subsection (1)

(i) in paragraph (c) by striking out “spouse” and substituting “spouse or common-law partner”;

(ii) in paragraph (d) by striking out “spouse” and substituting “spouse or common-law partner”;

(b) in subsection (5) by striking out “spouse” and substituting “spouse or common-law partner”.

3 Subsection 28(3) of the Act is amended

(a) in paragraph (c) by striking out “spouse” and substituting “spouse or common-law partner”;

(b) in paragraph (d) by striking out “spouse” and substituting “spouse or common-law partner”.

4 Paragraph 32(1)(b) of the Act is amended by striking out “section 43” and substituting “section 43.1”.

5 Subsection 34(4) of the Act is amended by striking out “spouse” and substituting “spouse or common-law partner”.

6 Section 41 of the Act is amended

(a) by repealing subsection (1);

(b) by adding before subsection (2) the following:

41(1.1) A pension that commences to be paid under a pension plan on or after the commencement of this subsection to a member or former member who has a spouse or common-law partner when the pension commences to be paid shall be in the form of a joint and survivor pension payable during the lives of the member or former member and the member’s or former member’s spouse or common-law partner.

41(2) The commuted value of the joint and survivor pension payable under subsection (1.1) shall not be less than the commuted value of the pension that would be payable under the pension plan if the member or former member did not have a spouse or common-law partner.

(d) by adding after subsection (2) the following:

41(2.1) Despite subsection (1.1), in the case of a member or former member, who when the payments commenced did not have a “spouse” as this term was defined at the time, a joint and survivor pension may be paid if:

(a) the member or former member has a spouse or common-law partner of the same sex,

(b) when the payments commenced the persons mentioned in paragraph (a) would have been contemplated by the definition of “spouse” as the definition read at that time, except for the fact that they were a couple of the same sex, and

(c) the spouse or common-law partner of the member or former member directs the pension administrator in writing that the pension be paid in the form of a joint and survivor pension.

41(2.2) The commuted value of the joint and survivor pension referred to under subsection (2.1) shall be valued as of the date of the directive given in accordance with paragraph (2.1)(c), but shall not be less than the commuted value of the pension, evaluated as of the same date, which is then being paid to the member or former member.

41(2.3) Subject to subsection (2.2), the pension benefits and ancillary benefits under the joint and survivor pension under subsection (2.1) shall not be less than those which would have been provided under the pension plan if the pension had been paid from the commencement of payments in the form of the joint and survivor pension.

(e) in subsection (3) by striking out “spouse” and substituting “spouse or common-law partner”.

(f) by repealing subsection (4) and substituting the following:

41(4) A member and the member’s spouse or common-law partner or a former member who is entitled to a deferred pension and the former member’s spouse or common-law partner may, in accordance with the regulations, jointly in writing direct the administrator of the pension plan to waive the joint and survivor pension under subsection (1.1).

(g) in subsection (6) by striking out “spouse” wherever it appears and substituting “spouse or common-law partner”;

(h) in subsection (7) by striking out “spouse” and substituting “spouse or common-law partner”.

7 Section 42 of the Act is amended

(a) by repealing subsection (1) and substituting the following:

42(1) The spouse or common-law partner of a deceased former member of a pension plan who is receiving a pension under the pension plan is not disentitled to payment of the pension by reason only of entering into a marriage or common-law partnership after the death of the former member.

(b) by repealing subsection (2);

42(3) Subsection (1) applies to pensions in payment at the commencement of this subsection and to pensions that commence to be paid after the commencement of this subsection.

8 Section 43 of the Act is repealed.

9 The Act is amended by adding before section 44 the following:

Death of former member before payment of pension benefit or deferred pension

43.1(1) Subject to subsections (7) and (8), if a former member of a pension plan dies before the commencement of payment of a deferred pension to which the former member is entitled under section 35, the spouse or common-law partner of the deceased former member at the date of death is entitled to a payment equal in amount to the commuted value of the deferred pension.

43.1(2) Subject to subsections (7) and (8), if a member of a pension plan is entitled to a deferred pension under section 35 on termination of employment and dies while employed, the spouse or common-law partner of the deceased member is entitled to a payment equal in amount to the commuted value of the deferred pension.

43.1(3) Where a member of a pension plan is not entitled to a deferred pension under section 35 and dies while employed, the spouse or common-law partner of the deceased member is entitled to payment of the deceased member’s contributions with interest.

43.1(4) A member or former member may designate a beneficiary and the beneficiary is entitled to the payment referred to in subsection (1), (2) or (3), as the case may be.

43.1(5) A designation under subsection (4) has no effect if the member or former member has a spouse or common-law partner at the date of death.

43.1(6) Where the member or former member does not have a spouse or common-law partner at the date of death and has not designated a beneficiary under subsection (4), the payment shall be made to the estate of the member or former member.

43.1(7) Where the member or former member is covered by a group life insurance plan sponsored, and paid for wholly or in part, by the employer, and the benefit to the surviving spouse, surviving common-law partner, designated beneficiary or estate under that plan is at least equal to the benefit referred to in subsection (1) or (2), a pension plan may provide that the benefit referred to in subsection (1) or (2) does not apply and the administrator shall pay to the surviving spouse, surviving common-law partner, designated beneficiary or estate, as the case may be, a sum equal to the contributions of the member or former member with interest.

43.1(8) Where the member or former member is covered by a group life insurance plan sponsored, and paid for wholly or in part, by the employer and the benefit to the surviving spouse, surviving common-law partner, designated beneficiary or estate under that plan is less than the benefit referred to in subsection (1) or (2), a pension plan may provide that the benefit referred to in subsection (1) or (2) shall be reduced by the amount of the benefit under the group life insurance plan.

43.1(9) Where the contributions with interest of the member or former member are in excess of those required for the benefit referred to in subsection (1), (2) or (8), the administrator shall pay that excess to the surviving spouse, surviving common-law partner, designated beneficiary or estate, as the case may be.

43.1(10) This section applies only in respect of deaths occurring after the commencement of this section.

10 The heading “MARRIAGE BREAKDOWN” preceding section 44 of the Act is repealed and the following is substituted:

BREAKDOWN OF A MARRIAGE OR COMMON-LAW PARTNERSHIP

11 Section 44 of the Act is repealed and the following is substituted:

Division of pension benefits or pension on breakdown of a marriage or common-law partnership

44(1) Where a competent tribunal makes a decree, order or judgment in relation to the division of a benefit under a pension plan on the breakdown of a marriage or common-law partnership, the commuted value of the benefit shall be determined in accordance with this Act and the regulations as of the date of the breakdown of the marriage or common-law partnership and shall be divided in accordance with the decree, order or judgement of the tribunal.

44(2) The portion of the benefits to which a non-member spouse or common-law partner is entitled pursuant to a tribunal decree, order or judgement referred to in subsection (1) shall be dealt with in accordance with section 36.

44(3) If the non-member spouse or common-law partner fails to direct the administrator of the pension plan in relation to the manner in which the non-member spouse or common-law partner’s entitlement is to be dealt with under section 36, the non-member spouse or common-law partner shall be deemed to have directed the administrator to purchase a deferred life annuity.

44(4) If benefits under a pension plan have been divided in accordance with subsection (1), the non-member spouse or common-law partner has no further right under the pension plan and the member or former member’s benefits shall be revalued accordingly.

44(5) If a domestic contract provides for the division of benefits under a pension plan on the breakdown of the marriage or common-law partnership, the commuted value of the benefits shall be determined in accordance with this Act and the regulations as of the date of the breakdown of the marriage or common-law partnership and shall be divided in accordance with the domestic contract.

44(6) A division of benefits under a pension plan on the breakdown of the marriage or common-law partnership pursuant to a domestic contract shall not result in a reduction of the commuted value of a member’s or former member’s benefits by more than fifty per cent.

44(7) Subsections (2), (3) and (4) apply with the necessary modifications to a division of benefits under subsection (5).

44(8) The commuted value of benefits for the purposes of this section that are not deferred pensions shall be determined as if the member had terminated employment on the date of the breakdown of the marriage or common-law partnership.

44(9) If a competent tribunal makes a degree, order or judgment in relation to the division of a pension under a pension plan on the breakdown of a marriage or common-law partnership, the commuted value of the pension, taking into account any survivor rights under the pension plan, shall be determined in accordance with this Act and the regulations as of the date of the breakdown of the marriage or common-law partnership and shall be divided in accordance with the decree, order or judgment of the tribunal.

44(10) The value of the pension determined under subsection (9) that is to be attributed to the spouse or common-law partner of the former member shall be dealt with in accordance with section 36 and the spouse or common-law partner shall have no further right under the pension plan and the pension of the former member shall be revalued accordingly.

44(11) If the spouse or common-law partner of the former member fails to direct the administrator of the pension plan in relation to the manner in which the spouse or common-law partner’s entitlement is to be dealt with under section 36, the spouse or common-law partner shall be deemed to have directed the administrator to purchase a deferred life annuity.

44(12) If a domestic contract provides for the division of a pension under a pension plan on the breakdown of the marriage or common-law partnership, the commuted value of the pension, taking into account any survivor rights under the pension plan, shall be determined as of the date of the breakdown of the marriage or common-law partnership in accordance with this Act and the regulations and shall be divided in accordance with the domestic contract.

44(13) A division of a pension on the breakdown of the marriage or common-law partnership under a domestic contract shall not result in a reduction of the commuted value of a former member’s pension by more than fifty per cent.

44(14) Subsections (10) and (11) apply with the necessary modifications to a division of a pension under subsection (12).

44(15) If a member would not be entitled to a deferred pension under section 35 on termination of employment, the portion of the member’s contributions with interest to be attributed to the non-member spouse or common-law partner may be paid out in cash.

44(16) A division of benefits, including a pension, or contributions under this section applies only in relation to benefits or contributions accrued between the date of marriage or formation of the common-law partnership and the date of the breakdown of the marriage or common-law partnership.

44(17) The division of benefits, including pensions, or contributions under this section is limited by any restrictions imposed by this Act or the regulations in relation to the payment of money out of a pension fund.

44(18) Revaluation of a benefit or pension pursuant to this section shall be in accordance with the regulations.

12 Section 45 of the Act is repealed and the following is substituted:

Payment of sum in lieu of amount owing

45 Where a decree, order or judgment or a domestic contract referred to in section 44 provides for payment by the member or former member of a sum equal to and in lieu of the amount owing to the member’s or former member’s spouse or common-law partner in relation to a pension or benefit, the administrator and the pension fund are not liable for any payments.

13 Subsection 56.1(1) of the Act is amended

(a) in paragraph (a) by striking out “spouse” and substituting “spouse or common-law partner”;

(b) in paragraph (b) by striking out “spouse” and substituting “spouse or common-law partner”;

14 Paragraph 100(1)(m) of the Act is amended by striking out “marriage breakdown” and substituting “the breakdown of a marriage or common-law partnership”.

15 This Act or any provision of it comes into force on a day or days to be fixed by proclamation.

EXPLANATORY NOTES

Section 1

(a)

i) The existing definition reads as follows:

“spouse” means either of a man and a woman who (spouse)

(a) are married to each other,

(b) are married to each other by a marriage that is voidable and has not been avoided by a declaration of nullity,

(c) have gone through a form of marriage with each other in good faith that is void and have cohabited within the preceding year, or

(d) not being married to each other, have cohabited

(i) continuously for a period of not less than three years in a conjugal relationship in which one person has been substantially dependent upon the other for support, or

(ii) in a relationship of some permanence where there is a child born of whom they are the natural parents,

and have cohabited within the preceding year;

ii) Consequential amendment.

iii) Consequential amendment.

iv) New definitions.

(b) The existing provision is as follows:

1(2) The entitlement under a pension plan of any person as a spouse of a member or former member of the pension plan shall not diminish the entitlement of any person who is lawfully married to the member or former member or of a child of that marriage.

Section 2

(a)

i) Consequential amendment.

ii) Consequential amendment.

(b) Consequential amendment.

Section 3

(a) Consequential amendment.

(b) Consequential amendment.

Section 4

Consequential amendment.

Section 5

Consequential amendment.

Section 6

(a) Consequential amendment.

(b) New provision.

(d) New provisions.

(e) Consequential amendment.

(f) Consequential amendment.

(g) Consequential amendment.

(h) Consequential amendment.

Section 7

(a) Consequential amendment.

(b) Consequential amendment.

Section 8

Consequential amendment.

Section 9

Consequential amendment.

Section 10

The existing heading reads as follows:

MARRIAGE BREAKDOWN

Section 11

The existing provisions read as follows:

44(1) If a court, on an application to divide marital property under the Marital Property Act or under similar legislation in another jurisdiction, makes an order in relation to benefits under a pension plan, the commuted value of the benefits shall be determined in accordance with this Act and the regulations as of the date of marriage breakdown and shall be divided in accordance with the order of the court.

44(2) The portion of the benefits to which a non-member spouse is entitled pursuant to a court order referred to in subsection (1) shall be dealt with in accordance with section 36.

44(3) If the non-member spouse fails to direct the administrator of the pension plan in relation to the manner in which the non-member spouse’s entitlement is to be dealt with under section 36, the non-member spouse shall be deemed to have directed the administrator to purchase a deferred life annuity.

44(4) If benefits under a pension plan have been divided in accordance with subsection (1), the non-member spouse has no further right under the pension plan and the member or former member’s benefits shall be revalued accordingly.

44(5) If a marriage contract or a separation agreement as defined in the Marital Property Act provides for the division of benefits under a pension plan on marriage breakdown, the commuted value of the benefits shall be determined as of the date of marriage breakdown in accordance with this Act and the regulations and shall be divided in accordance with the marriage contract or separation agreement.

44(6) A division of benefits under a pension plan on marriage breakdown pursuant to a marriage contract or a separation agreement shall not result in a reduction of the commuted value of a member’s or former member’s benefits by more than fifty per cent.

44(7) Subsections (2), (3) and (4) apply with the necessary modifications to a division of benefits under subsection (5).

44(8) The commuted value of benefits for the purposes of this section that are not deferred pensions shall be determined as if the member had terminated employment on the date of marriage breakdown.

44(9) If a court, on an application to divide marital property under the Marital Property Act or under similar legislation in another jurisdiction, makes an order in relation to a pension under a pension plan, the commuted value of the pension, taking into account any survivor rights under the pension plan, shall be determined in accordance with this Act and the regulations as of the date of marriage breakdown and shall be divided in accordance with the order of the court.

44(10) The value of the pension determined under subsection (9) that is to be attributed to the spouse of the former member shall be dealt with in accordance with section 36 and the spouse shall have no further right under the pension plan and the pension of the former member shall be revalued accordingly.

44(11) If the spouse of the former member fails to direct the administrator of the pension plan in relation to the manner in which the spouse’s entitlement is to be dealt with under section 36, the spouse shall be deemed to have directed the administrator to purchase a deferred life annuity.

44(12) If a marriage contract or a separation agreement as defined in the Marital Property Act provides for the division of a pension under a pension plan on marriage breakdown, the commuted value of the pension, taking into account any survivor rights under the pension plan, shall be determined as of the date of marriage breakdown in accordance with this Act and the regulations and shall be divided in accordance with the marriage contract or separation agreement.

44(13) A division of a pension on marriage breakdown pursuant to a marriage contract or a separation agreement shall not result in a reduction of the commuted value of a former member’s pension by more than fifty per cent.

44(14) Subsections (10) and (11) apply with the necessary modifications to a division of a pension under subsection (12)

44(18) Revaluation of a benefit or pension pursuant to this section shall be in accordance with the regulations.

Section 12

Consequential amendment.

Section 13

(a) Consequential amendment.

(b) Consequential amendment.

Section 14

Consequential amendment.

Section 15

Commencement provision.