“The process for valuating pensions is set forth in s. 67.2 of the [Pension Benefits Act] PBA, the relevant provisions of which provide as follows:
67.2 (1) The preliminary value of a member’s pension benefits, a former member’s deferred pension or a retired member’s pension under a pension plan, before apportionment for family law purposes, is determined by the administrator in accordance with the regulations and as of the family law valuation date of the member, former member or retired member and his or her spouse. 2010, c. 9, s. 44 (1).
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(5) The imputed value, for family law purposes, of each spouse’s pension benefits, deferred pension or pension, as the case may be, is that portion of the preliminary value that is attributed by the administrator, in accordance with the regulations,
(a) to the period beginning with the date of the spouses’ marriage and ending on their family law valuation date, for the purposes of an order under Part I (Family Property) of the Family Law Act; or
(b) to the period beginning with the date determined in accordance with the regulations and ending on the spouses’ family law valuation date, for the purposes of a family arbitration award or domestic contract. 2009, c. 11, s. 49.
The other critical legislative provisions for the purposes of the valuation of pensions in the family law context are subsections 10.1(1) and 10.1(2) of the FLA:
10.1(1) The imputed value, for family law purposes, of a spouse’s interest in a pension plan to which the Pension Benefits Act applies is determined in accordance with section 67.2 or, in the case of a spouse’s interest in a variable benefit account, section 67.7 of that Act. 2009, c.11, s. 26; 2017, c. 8, Sched. 27, s. 21 (1).
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(2) The imputed value, for family law purposes, of a spouse’s interest in any other pension plan is determined, where reasonably possible, in accordance with section 67.2 or, in the case of a spouse’s interest in a variable benefit account, section 67.7 of the Pension Benefits Act with necessary modifications. 2009, c.11, s. 26; 2017, c. 8, Sched. 27, s. 21 (1).
The use of the phrase “with necessary modifications” in s.10.1(2) of the FLA indicates a legislative intent that the substance of s. 67.2 of the PBA be applied, while recognizing that some details may require modification. As the Supreme Court of Canada has recently observed, the words “with necessary modifications” are a contemporary reformulation of the Latin phrase mutatis mutandis: see R. v. Penunsi, 2019 SCC 39, 378 C.C.C. (3d) 37, at para. 49. They mean that the rules to be applied are read with necessary changes in points of detail, while the matter remains the same: Penunsi, at para. 50.
In a recent decision considering s. 10.1(2) of the FLA, Raikes J. held that any departure from the PBA methodology must be justified as necessary by the party seeking that departure: Kelly v. Kelly, 2017 ONSC 7609, at paras. 161-162. I agree with and adopt that statement. This approach is consistent with the language of necessary modification. If one of the parties can show that, because the plan is not regulated under the PBA, a modification to the approach is necessary, departure will be warranted. Otherwise, the default position is that the PBA approach is to be used.
This approach is also consistent with the legislative intent in reforming pension valuation on marital breakdown. The purpose of the new legislation was to create a uniform approach that would create certainty and avoid costly litigation over pension valuations: see Ontario, Legislative Assembly, Official Report of Debates (Hansard), 39th Parl., 1st Sess., No. 92 (24 November 2008) at 4156 (Hon. Christopher Bentley); and Ontario, Legislative Assembly, Official Report of Debates (Hansard), 39th Parl., 1st Sess., No. 111 (19 February 2009) at 4891 (Hon. Christopher Bentley).
In summary, the legislature has signalled a clear intention in s. 10.1(2) of the FLA that a non-Ontario pension be valuated wherever possible in the same manner as an Ontario regulated pension. This means that the valuation formula in the PBA regulation Family Law Matters O. Reg. 287/11 should be applied to a non-Ontario pension with modifications only where necessary. In addition, a purposive interpretation of s. 10.1(2) of the FLA requires that, to the extent that other Ontario statutory provisions or regulatory requirements impact the valuation of a pension for family law purposes, they too should be applied to the valuation of a non-Ontario pension.
In other words, a pension administrator should, to the extent possible, valuate a non-Ontario pension as if it were an Ontario pension. This is consistent with the purpose of the valuation exercise, which is to obtain a fair, predictable, and consistent division of net family property. Thus, it is important that provincial and federal pensions be valuated in the same manner, to the extent reasonably possible.”