The Pension Benefits Act
The Pension Benefits Act applies to pension plans sponsored by an employer for employees in Manitoba. It does not apply to the Canada Pension Plan, to federally regulated pension plans (e.g., plans for employees of banks and airlines), to federal government employees or to personal Registered Retirement Savings Plans (such as RRSPs).
Amendments to The Pension Benefits Act that came into effect October 1, 2021 made a number of important changes to the law relating to pensions in Manitoba, including:
- allowing a pension plan member, regardless of their age, with pension credit funds held in Manitoba locked-in retirement accounts to apply for access once per calendar year to a portion of such funds under certain financial hardships, such as low expected income, uninsured medical expenses or if they are at risk of mortgage foreclosure on their home (the person may choose more than one reason per application);
- allowing individuals aged 65 and over to unlock 100% of their funds in their Manitoba locked-in retirement accounts such as a locked-in retirement account (LIRA) or life income fund (LIF);
- providing new rules for splitting a party’s pension benefit credits when they experience a relationship breakdown with a separation date on or after October 1, 2021.
How are pension benefit credits shared upon a relationship breakdown?
Depending upon whether spouses or eligible common-law partners were separated prior to October 1, 2021 or they separated on or after October 1, 2021, different rules will apply with respect to dividing pension benefit credits earned during the marriage by either spouse or during the common-law relationship by either qualifying common-law partner.
To qualify as common-law partners under The Pension Benefits Act, a couple must have registered their relationship with the Vital Statistics Agency, or they must have cohabited in a conjugal relationship for at least three years if either of them is married, or they must have cohabited in a conjugal relationship for at least one year, if neither of them is married.
For married or common-law couples who separated prior to October 1, 2021, the old provisions in The Pension Benefits Act (pre-dating the October 1, 2021 amendments) respecting division of an applicable pension remain in effect.
In that case, if there is a court order dividing a couple’s family assets or requiring a division of a pension or a written agreement dividing family assets, the legislation provides that there are three options for dividing a member’s pension:
- the pension accrued during the relationship is divided equally on a 50-50 basis;
- if both parties have a pension, then divide the net difference between the two pensions on an equal basis; or
- the parties could opt out of a division of the pension by signing a waiver agreement.
However, such a waiver agreement not to divide a pension is only valid if it contains the terms set out in the regulations and the agreement is filed with the pension plan administrator or financial institution. In addition, before signing the agreement, each spouse or common-law partner must obtain independent legal advice and receive a statement from the pension plan administrator specifying the pension benefits to which they would have been entitled under the Act.
For married or common-law partners who separate on or after October 1, 2021, the current provisions of the legislation provide two options regarding division of a pension:
- a couple can now divide a pension up to a 50% basis. Parties must either have a written agreement or obtain a court order which specifies the percentage of the pension up to 50% to be divided in favour of the other party. This option gives the parties more flexibility in dividing a pension because it can allow the percentage to be credited to the other party to be between 0% to 50%.
- the parties can decide not to divide a pension by specifying in a written agreement or court order that a pension member’s spouse or partner is not entitled to any portion of the member’s pension.
Unlike the pre-October 1, 2021 provisions of the Act, there is no requirement for couples separating on or after October 1, 2021 that they receive independent legal advice or a statement from the pension plan administrator specifying the value of the pension that accrued during their relationship before they agree to waive a division of the pension.
However, the legislation provides that either spouse or common-law partner may request in writing a statement from the pension plan administrator or financial institution.
It is also still recommended in appropriate cases that parties seek independent legal advice even though it is no longer required, particularly if they are uncertain about the impact that waiving a division of the pension might have on them.
How are pension benefit credits transferred?
The portion of pension benefit credits to which a spouse or common-law partner becomes entitled under The Pension Benefits Act is transferred directly to that spouse or partner, but not in funds. Instead, they must transfer the credits directly to their own pension (if the plan permits) or to a life income fund, to a locked-in retirement account, or to an immediate or deferred life annuity purchased through a life insurance company (if the plan permits). If the credits are transferred to a LIRA, the spouse or common-law partner may purchase a life annuity at any age.
Where can I get more information?
For further information on the division of pension benefits or pension benefit credits under The Pension Benefits Act, contact:
Office of the Superintendent – Pension Commission
Department of Finance
824 - 155 Carlton Street
Winnipeg, MB R3C 3H8
Toll Free: 1-800-282-8069 (Ext. 2740)