The Supreme Court of Canada has dismissed the application for leave to appeal in Carrigan v. Carrigan Estate, a case that has changed how pre-retirement death benefits are paid out.
Plan member Ronald Carrigan died prior to retirement. When he died, it was not a clear-cut matter on whom his pre-retirement death benefit be paid to.
Although separated, Ronald was still legally married to Melodee Carrigan. However, he had been living with Jennifer Quinn in “a conjugal relationship” with Ronald for about eight years prior to his death.
The Court of Appeal’s interpretation of the Pension Benefits Act concluded that Melodee was not entitled to the death benefit, because she was living separate and apart from Ronald at the time. Jennifer, although a qualified as a “spouse” under the PBA was also not entitled to the death benefit because Ronald and Melodee were not divorced.
The appeal court stated that the death benefit should be paid to Ronald’s designated beneficiary.
This decision contradicted how everyone in the industry had been operating: in such circumstances the common law spouse would be entitled to the death benefit.
Because the Supreme Court refused to grant leave to appeal, pending any amendments to the PBA, the Ontario Court of Appeal decision must now be applied by pension plan administrators.
Douglas Rienzo, a partner in Osler’s pension and benefits practice says that plan administrators should consider reviewing plan communication materials and providing checklists and training for staff to deal with member queries related to death benefits.
Also, educating plan members on the issue and potential consequences could save a lot of headaches—for the company and loved ones—in the future.