Pension Benefits are one area of the law where provincial and federal legislation provide a contrast with each other despite similar subject matter.
Federally, the Pension Benefits Standards Act (“PBSA”) governs those entities involved in work “within the legislative authority of the Parliament of Canada” including: navigation and shipping, railways, shipping, air transportation, and banking.
Provincially (in Ontario for our discussion), the Pension Benefits Act (“PBA“) “applies to every pension plan that is provided for persons employed in Ontario.”
For the purposes of estates and trusts practitioners, it is important to appreciate the differing treatment of spousal entitlements as they relate to beneficiary designations.
Unlike the provincial PBA, the PBSA does not provide for the designation of a beneficiary that can override the entitlement of a surviving spouse to survivor benefits.
The PBSA requires that a spouse specifically waive their entitlements to the pension plan using a prescribed form that is deposited with the administrator of the plan:
except that, where the member or former member has a spouse or common-law partner, an election as a result of which the pension benefit would reduce on the death of the member or former member, where the member or former member predeceases the spouse or common-law partner, to less than sixty per cent of the amount payable when both were alive, may not be made without the spouse’s or common-law partner’s written agreement, in prescribed form and deposited with the administrator of the plan.
Spousal waivers must contain all of the information as prescribed in Form 4 of Schedule II to the PBSA.
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