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Fuss About Pensions – Practical Advice

“Fuss About Pensions – Practical Suggestions”, Money & Family Law, August 1996;

Published in Law Times, 29 July 1996;

I wrote this article a very long time ago. Since that time, Ontario has reformed its pension division law. – Gene C. Colman


This article was published in the July 29 – August 6, 1996 issue of Law Times and in the August 1996 issue of Money and Family Law , Vol. 11. No. 8. See the comments of pension valuator, G. Edmond Burrows, at the conclusion of this article.

Pensions are a part of property under the Family Law Act of Ontario (and in other Canadian jurisdictions). As an aspect of property, pensions must be valued for family law property division purposes. The recent case of Bascello v. Bascello (1995), 26 O. R. (3d) 342, has once again brought to the fore the difficulties inherent in valuation of pensions. Justice Kurisko undertakes an exhaustive analysis of the case law and the Ontario Law Reform Commission Report on Pensions. This case is required reading for those who wish to gain an appreciation of the debate extant in pension valuation circles. I will not attempt to give an exhaustive analysis of the decision. Rather, permit me to present some important practice points (alluded to in the case) for the family law practitioner:


Consider carefully the issue of whether or not the pension will be indexed after retirement. The differences in value between ‘no indexing’, to ‘part indexing’, to ‘full indexing’ can be staggering.

  • In Bascello, assuming a retirement age of 55, one actuary valued no indexing at $55,157.00 and full indexing at $146,580.
  • Where there is no contractual and legislative right to post retirement indexing (as in many private sector plans), talk to whomever you can to ascertain the prospects of future indexing. Gather your evidence and present it in first instance to your actuary and ultimately, to the court.
  • Remember, full indexing = higher value.

Pre-Retirement Indexing Net Interest Rates

In Bascello, the judge treated this private sector pension plan as fully indexed prior to retirement even though it was not. Mel Norton, who is the Chairperson of the Canadian Institute of Actuaries (CIA) Committee on Actuarial Evidence, lambastes this departure from accepted actuarial standards of practice. He states: “It seems particularly unfortunate that Kurisko J. chose to follow the concepts of one non-conformist actuary, rather than the collective wisdom of the Canadian actuarial profession.” [Ontario Family Law Reporter, Volume 9, Issue 9, page 157].

  • Be prepared to present argument as to why your client’s pension should not be valued on the basis that is fully indexed prior to retirement when the plan does not have such a feature.


Bascello differentiates between general and specific contingencies. In Bascello, vesting was 34 months post valuation date but vesting had occurred by the time of trial. Nonetheless, the judge stated (correctly I submit) that “post-valuation day events are to be disregarded”. Since there was a small general risk of the pension not vesting 34 months hence, the judge applied a discount of 2 per cent.

  • In a rather striking departure from legal precedent, the judge allowed a further 30% discount to the “as if vested” present value of the pension for post-vesting date contingencies such as early employment termination, premature death, illness and possibility that wages would not keep up with inflation. If you want to access such a discount, be prepared to argue why Bascello should be followed in this respect.
  • If you are relying on a contingency specific to your client’s situation, then get that evidence and inform your actuary! Contingencies, according to Justice Kurisko in Bascello, can affect value. Interview your client. Interview the witnesses. Present the evidence to your actuary.

(Most judges have not directly addressed the contingency issue, as did Kurisko, J. Now there is a strong precedent for this approach. Acting for the pensioned spouse requires counsel to present these arguments until the Court of Appeal opines otherwise. Mel Norton, on the other hand, was not enamoured particularly with Kurisko J.’s ‘contingency’ approach.)

Age of Retirement

The non pensioned spouse will invariably maintain that the intended retirement date is the earliest date possible. (This gives a greater present value to the pension.) The judge stated that “a presumption that favours either the earliest or the latest date is unfair” and he indicated fairness dictated the middle date between the two extremes. But in Bascello, there was no evidence of intended retirement date from either party.

  • It is incumbent upon counsel to thoroughly investigate all the facts including the intentions of the parties prior to their separation with respect to probable retirement dates, etc.
  • Garner the evidence that is helpful to one’s client.
  • If the evidence is not helpful, consider advocating the fairness position of the mid point, as in Bascello.

The Ontario Court of Appeal recently dealt with the age of retirement problem. In Kennedy v. Kennedy, unreported, 4 March 1996, digested at [1996] O.J. No. 764, the court disagreed with the trial judge’s automatic imposition of the earliest possible retirement date as in Forster v. Forster (1987), 11 R.F.L. (3d) 121 (Ont. Gen. Div.). The court held that there is no “presumption in favour of the earliest possible retirement date.”

Tax Rate

In Bascello, counsel did not lead evidence as to what the likely tax rate upon retirement would be. The judge used 25% which is not inconsistent with other cases. The writer has seen as low as 19% and higher rates, depending on projected income levels at retirement.

  • If your pensioned client is going to have income above the norm and his/her tax rate will be higher, then make sure you inform your actuary so that the higher tax rate can be used in the report.
  • Higher tax = lower pension value = lower equalization payment.

Prejudgment Interest

In Bascello, the husband persisted in what the judge ultimately found to be an unrealistically low value. Therefore, some prejudgment interest was ordered.

  • Do not assume that since we are dealing with a non liquid asset that the court will not award some amount of prejudgment interest for some period of time.
  • Review Bascello early during your case to appreciate some of the factors which a court may consider in awarding interest. Calculate the cost of delay (in its widest sense).

General Approach reflected by the above

Justice Kurisko did not agree with the approach of Mr. Dibben, the pensioned spouse’s actuary. Mr. Dibben had employed a “strict termination method”. The trial decision of Salib v. Cross (1993), 15 O.R. (3d) 521 (Gen. Div.) is alluded to but is not accepted by Justice Kurisko as the correct approach.

  • However, our Court of Appeal has since dealt with Salib – (1995), 27 O.R. (3d) 255 and stated:

    “In adopting the former method [ie. “termination method of valuation”] …the trial judge gave careful reasons as to why she felt it was the more appropriate method having regard to the particular facts of this case. … We can find no reason for interfering with her treatment of the valuation of the respondent’s pension.”

  • In a recent General Division decision – Sauder v. Sauder, unreported, 1 May 1996, Court File No. A4123/93, Sudbury, Meehan, J. – the judge accepts the approach of the ‘losing’ actuary in Bascello, Mr. Dibben. The judge stated:

    ” …I am not willing to use the approach set out in Bascello, because of the reluctance of Mr. Dibben to do so.”

  • The judge then adopted the trial decision of Justice Chapnik in Salib v. Cross and noted that the latter decision was upheld by the Ontario Court of Appeal.
  • Although Bascello is not the last word, counsel should pay heed to the approaches used there and the comments of the trial judge with respect to the areas of evidence which were omitted by counsel.

Re: Valuation of Pensions on Marriage Breakdown

by G. Edmond Burrows, F.C.A. – Pension Valuators of Canada
19 August 1996

I enjoyed very much your article in the Law Times of July 29 dealing with practical tips for general practitioners. Your article was certainly … informative and … interesting. … I appreciate your views and congratulate you on writing an article that is informative, interesting and very easy to read and understand.

I have a few comments which I hope you will appreciate.


We agree with the contingencies that were provided by Justice Kurisko in Bascello except for the fact that his discount percentages were arbitrary.

The Standards issued by the Canadian Institute of Actuaries do provide that no discount should be included for the possibility that a member may not reach early retirement age. We disagree with this provision in the Standards and agree with Justice Kurisko’s approach other than the arbitrariness of his discount.

Age of Retirement

In your article you say “it is incumbent upon counsel to thoroughly investigate all the facts including the intentions of the parties prior to their separation with respect to probable retirement dates.”

While the intentions of the parties prior to their separation are important to consider, in our opinion there are more important considerations.

It has been our experience that many individuals change their retirement plans frequently right up until the time that they hand in their notice to their employer as to when they will retire. Certainly the separation and, or divorce, of a couple will often change the intentions that they had prior to their separation.

It is our opinion that a pension that provides for early retirement on a full pension is worth more than a pension plan that does not have this provision provided the individual will probably have an opportunity to take advantage of those provisions.

Enclosed is a brief we have written dealing with age of retirement. We hope you will find it interesting and will appreciate receiving any comments you may have. [Note: The reader may obtain this brief and the one referred to in the next paragraph directly from Pension Valuators of Canada.]

Salib v. Cross

While I do not pretend to be a lawyer my understanding of the reading of Salib v. Cross is that the trial judge merely accepted that “termination method of valuation” was better than a “retirement method of calculation” which included the projection of future salary increases. Enclosed is another brief dealing with “Termination Value”. We trust you will find this interesting also and would appreciate any comments you have.

Again we do want to congratulate you on a well written article.



G. Edmond Burrows, F.C.A.
President and Specialist in Pension Valuations


Here are two important articles with respect to Bascello:

Hendrickson, Barbara: Bascello v. Bascello: A View From the OLRC, Money & Family Law, Vol. 11, No. 4, April 1996

Norton, J.M. (Mel): Valuation of Pension Entitlements upon Marriage Breakdown for Purposes of Lump Sum Equalization, Ontario Family Law Reporter, Volume 9, Issue 9, March 1996, page 155

Money & Family Law is published by Thomson Canada Ltd., the parent of Carswell legal publishers. I am not advertising for Carswell, but if you want to order from them on line, you can do so by clicking here:

Butterworths publishes the Ontario Family Law Reporter.


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