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Separation/Divorce – Saskatchewan

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Pension valuations

Pensions are often people’s most valuable asset, and are considered to be family property under the Family Property Act of Saskatchewan.

Defined benefit pensions are complex assets and can be difficult to deal with on divorce. There are two fundamental issues to consider: the mechanisms available to actually divide the pension and whether these mechanisms divide the pension fairly.

Pension Division

There are two primary mechanisms to divide a defined benefit pension: the actual pension payment can be split at retirement or a lump sum payment can be made from the pension plan to the non-member spouse. Depending on the member’s age, the law in Saskatchewan provides one or both of these options. In addition, the member spouse can “buy-out” the non-member spouse and not divide the pension at all. In order for a “buy-out” to occur, a fair value needs to be assigned to the pension (so the correct amount of the buy-out can be established).

Fair Value for the Pension

Assigning a value to a defined benefit pension is not a straight forward task (click here for more information). There are many different ways to value a defined benefit pension. This leads to much confusion when couples are attempting to assign a value to a defined benefit pension on marriage breakdown. The value that is provided by the pension plan administrator is calculated in accordance with Saskatchewan’s Pension Benefits Act and is intended to assist the couple by allowing a portion of the member’s pension to be divided. In many cases, however, this value is not a fair value to assign to the pension from an actuarial/economic perspective for the purpose of property division under Family Property Act of Saskatchewan and can understate the fair value of the pension. If the parties want to ensure that a fair value is being assinged to the pension, in many cases a full actuarial valuation by an independent actuary is required.

Foreign pensions/pensions from other provinces

In the case of foreign pensions, it is likely that an actuarial valuation by an independent actuary would be required. Actuaries can assist clients by valuing pensions from other countries and providing the lump sum value of a foreign pension in Canadian dollars and ensure that the valuation is in accordance with the standards of practice of the Canadian Institute of Actuaries; this valuation will enable the couple to include the fair value of their foreign pension with the rest of their family property.

Please read the information below and contact us if you have any questions.

Valuation of stock options and restricted stock units (RSUs)

Some employers provide stock option and/or restricted stock unit grants as part of an employee’s compensation. If stock options or restricted stock units have been granted during the period of marriage and have not been exercised at the date of separation, these options/units are generally considered family property and may need to be valued. For more information, click the link below.

Support payments

After a divorce, there is often a need for regular support payments to be made from one spouse to the other (either child support or spousal support). Please click the link below for more information on support payments.

Financial projections

It is important to consider the long-term financial implications of a separation agreement for both spouses; it is important that both spouses understand the impact that any settlement proposal will have on their future cash flow and net worth. For example, if a spouse keeps the matrimonial home as part of the settlement it is important that they have adequate cash flow to maintain the home and pay for their living expenses. Please click on the link below for more details.