Until recently, Alberta common-law couples that were splitting up couldn’t divide their pension assets, even if both parties wanted to.

This changed in April 2018, after the Court of Queen’s Bench of Alberta heard Lubianesky v. Gazdag. It determined the provision of the Employment Pension Plans Act that prevented such division was unconstitutional.

In 2015, two years after Christa Lubianesky and Dustin Gazdag’s 15-year common-law relationship ended, they entered into a parenting, support and property agreement. It included a lump-sum spousal support payment from Gazdag to Lubianesky to be funded by his pension plan and registered retirement savings plan. When Gazdag requested that his pension administrator transfer the funds, the administrator refused to do so, saying it violated the Employment Pension Plans Act.

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Interestingly, that act doesn’t explicitly forbid common-law couples from dividing pensions upon separation, says Daniel Colborne, a lawyer at Calgary-based law firm Yanko & Popovic, who represented Lubianesky.

The legislation simply states that pension division upon relationship breakdown is acceptable “in accordance with [an] applicable matrimonial property order or agreement.” But the act defines agreement based on the wording of the Matrimonial Property Act. And that statute only applies to married and formerly married spouses.

According to the Canadian Charter of Rights and Freedoms, laws can’t discriminate based on a number of grounds, such as race, sex, age, disability and marital status. “At the end of the day, it wasn’t fair to common-law couples that they don’t have the right to contract like married couples,” says Colborne.

The court’s solution was to interpret the provision to make it comply with the charter, says Kim Ozubko, a partner at Miller Thomson LLP in Toronto.

The court ruled that in the Employment Pension Plans Act, the term agreement will be interpreted as a written agreement between pension partners that meets requirements of the Matrimonial Property Act, “whether or not that act is applicable as between the pension partners.”

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“I think [the change] was long overdue,” says Ozubko. “[The legislation] was certainly a barrier to common-law spouses dividing their pension benefits. They couldn’t enter into an agreement as they could in another province in Canada to divide their pension assets.”

Common-law couples can divide their pensions in all other provinces except Newfoundland and Labrador.

If the limitation was included in employee handbooks, employers should follow them accordingly, but advance education isn’t otherwise needed, says Ozubko. “It’s something that the frontline human resources staff just need to be aware of when they’re presented with an agreement,” she says, noting the change also applies to financial institutions that administer locked-in plans.

While there haven’t been many successful constitutional challenges around pension law, there have been some in the employee benefits space. Ozubko points to Talos v. Grand Erie District School Board, a May 2018 decision in which the Human Rights Tribunal of Ontario found age discrimination in benefits plans is unconstitutional.

“The common challenge in benefit plans is the age restriction,” Ozubko says. “We see that with pension plans but it seems to be generally accepted that, for example, age 65 is a normal retirement age under a pension plan. I think it’s a little bit more controversial under benefits plans. . . . Perhaps the individual feels more of an immediate impact, for example, if their benefits are cut off at age 65.”

Read: Age discrimination in benefits plans unconstitutional, tribunal finds

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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