Manitoba Committee Hansard — Legislative Affairs Committee, Sitting 3 (32nd Legislature, 1st Session)

32-1-la3

Manitoba — Debates (Hansard)

ISSN 0542-5492 First Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on LAW AMENDMENTS 31 Elizabeth 11 Chairman Mr. Phi/ Eyler Constituency of River East VOL. XXX No. 3-10:00 a.m., THURSDAY, 17 JUNE, 1982. Printed by the Office of the Queens Printer. Province of Manitoba

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Second Legislature Members, Constituencies and Political Affiliation Name ADAM, Hon. A.R. (Pete) ANSTETT, Andy ASHTON, Steve BANMAN, Robert (Bob) SLAKE, David R; (Dave) BROWN, Arnold BUCKLASCHUK, John M. CARROLL, Q.C., Henry N. CORRIN, Brian COWAN, Hon. Jay DESJAR DINS, Hon. Laurent DODICK, Doreen DOERN, Russell DOLIN, Mary Beth DOWNEV, James E. DRIE DGER, Albert ENNS, Harry EVANS, Hon. Leonard S. EVLER, Phil FILMON, Gary FOX, Peter GOURLAY, D.M. (Doug) GRAHAM, Harry HAMMOND, Gerrie HARAPIAK, Harry M. HARPER, Elijah HEMPH ILL, Hon. Maureen HYDE, Lloyd JOHNSTON, J.

Frank KOSTVRA, Hon. Eugene KOVNATS, Abe LECUVER, Gerard LYON, Q.C., Hon. Sterling MACKLING, Q.C., Hon. AI MALINOWSKI, Donald M. MANNESS, Clayton McKENZIE, J. Wally MERCIER, Q.C., G.W.J. (Gerry) NORDMAN, Rurik (Ric) OLESON, Charlotte ORCHARD, Donald PAWLEV, Q.C., Hon. Howard R. PARASIUK, Hon. Wilson PENNER, Q.C., Hon. Roland PHILLIPS, Myrna A. PLOHMAN, John RANSOM, A. Brian SANTOS, Conrad SCHROEDER, Hon. Vie SCOTT, Don SHERMAN, L.R. (Bud) SMITH, Hon. Muriel STEEN, Warren STORIE, Jerry T. URUSKI, Hon. Bill USKIW, Hon. Samuel WALDING, Hon. D. Jarnes Constituency Ste.

Rose Springfield Thompson La Verendrye Mi nnedosa Rhineland Gimli Brandon West Ell ice Chu rchill St. Boniface Riel Elmwood Kildonan Arthur Emerson Lakeside Brandon East River East Tuxedo Concordia Swan River Virden Kirkfield Park The Pas Ruperts land Logan Portage la Prairie Sturgeon Creek Seven Oaks Ni akwa Radis son Charleswood St. James St. Johns Morris Roblin-Rus sell St. Norbert As sinib oia Gladstone Pembina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountain Burrows Rossme re lnkster Fort Garry Osborne River Heights Flin Flon lnterlake Lac du Bonnet St.

Vital Party NDP NDP NDP PC PC PC NDP NDP NDP NDP NDP NDP NDP NDP PC PC PC NDP NDP PC NDP PC PC PC NDP NDP NDP PC PC NDP PC NDP PC NDP NDP PC PC PC PC PC PC NDP NDP NDP NDP NDP PC NDP NDP NDP PC NDP PC NDP NDP NDP NDP

LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON LAW AMENDMENTS Thursday, 17 June, 1982 Time - 10:00 a.m. CHAIRMAN - Mr. P. Eyler. MR. CHAIRMAN: Com mit tee come to order. We have our quo rum. We have several bills to consi der today and presentations from the publi c on several of these bills. How does the commit tee wish to proceed? All of the prese ntations at once and then the bi lis later or bill by bill? Mr. Penner. HON. R. PENNER: Mr. Chairman, may I propose, so that people who are waiting to make presentat ions can have some way of budgeting their time, that we hear all the presenta tions first?

MR. CHAIRMAN: Is that agreed by the comm ittee? (Agreed) BILL 15-THE MARITAL PROPERTY ACT MR. CHAIRMAN: The first person on the list is Ms Georgia Cordes on Bill No. 15 . MS G. COR DES: Thank you. I'm here today on behalf of the Winnip eg YWCA. The Winn ipeg YWCA is ple ased to have the opp or tunity to appear before this comm ittee today to speak to Bill 15 ,

An Act to amend The Marital Property Act. Our organization has had a continuin g interest and inp ut into pension reform for women for approxi mately 10 years. We can apprecia te the dir ection of Bill 15 to increase the possibili ty of spouses to equally share pension assets at marriage breakdown. We heartily applaud its proposal to have pensions consi dered as family assets rather than comme rcial assets. Resumption of equal sharing should be more read ily apparent to the jud iciary.

Our YWCA nevertheless remains extremely con cerned that Bill 15 contains sections by whic h ju dges, . accord ing to a variety of legal consu ltants, may easily use judicial di scretion to vary spousal sharing of pen sion assets. These sections are the final paragraph of

Section 4, accord ing to how the bill is outlined, Item 8.1 (1 ) and

Section 5, Item 14 (3).

Perhaps I'll just read those, looking at the bill unde r No. 4, Item 8.1 (1 ). the final paragraph read s: "but the Act does not apply where it is in fact ascerta ined, as at the closing and valuation date, that there is no rea sonable possi bil ity of the rights ever being realized." Under No. 5, Item 14 (3): "Where an asset is by its nature not a marketable item, subsection (2) does not apply and the value of the asset for the purposes of su bsec tion (1) shall be dete rmined on such other basis or by such other means as a court deems appropriate for assets of that nature." While researc hing The British Columbia Family Relations Act and their subsequent decisions, we note that no such judicial dis cretion exists in that jurisd ic tion where pension assets are being shared. lt appears 25 entirely possible that Manitoba's lsbis ter decision could be duplic ated under Bill 15 , given the two above notice sections and given that The Pension Benefits Act is not being simu ltaneously amended to allow for espousal division of pension assets or pension credits.

I' d like to read to you from an item written by AI ice Stein bart of the Coalition on Family Law: "Bill 15 accepts the concept of separate as to prope rty in respect of pensions, so that the pension always remains the contribu tor's pension. Bill 15 proposes that pensions be divided in the following manner, for example: the value of all the assets of the hus band would be added up, including pensions, in one column and the value of all the assets of the wife in another column. Outsta nding debts will be deducted so that you will have the net value of each estate.

If the hus band's estate is larger, the value of the wife's estate is deduc ted from his and she is entitled to receive one half of the dif ference called the equalizing payment. The wife is never entitled to receive any of the actual property of the husband unless he decides to give it to her.

She is only entitled to a money payment." Perhaps it wou ld be help ful to reit erate the Win nip eg YWCA's in itial September, 19 81, response and suggestions to the Court of Appeal decision of lsbis ter versus lsbis ter submit ted to the Attorney-Gene ral's office and I quo te: "The Young Women's Christian Assoc iation of Winnip eg wis hes to register its deep concern regard ing the Ju ne, 19 81 , Man itoba Court of Appeal family law decision of lsbis ter versus lsbister. Mr. Ju stice J .A.

Monnin' s ruling on behalf of the Court of Appeal that pension plans were not shareable between spous es is one which our organization cannot condone. "In our brief to the Stan din g Com mit tee of the Legis lature on Statutory Regulations and Orders du ring 19 78, in response to the proposed revisions to The Marital Property Act. we vie wed marriage as a true partnership in whic h both spouses share eq ually. In addition, we stated that any spouses associated with developing commercial assets is using the resources of the marriage partnership in his or her aspirations.

We urge that division of commercial assets not be given wide judi cial discretion. "The marriage of the lsbis ters was of a 1 0-year dura tion during which time $1 2,0 00 of the coup le's family income was contributed to the husband's various pension plans. The YWCA contends that both spous es contribu ted to the abil ity of the pension plan memb er to take

part in those pension plans. This was possible by virtue of the equal contribution through wage earn ing and non- wage earning roles within the marriage partnership, as well as the necessity of both spouses to manage the family without the additional $1 2, 000.00. "The YWCA reco mm ends that, No. 1, The Marital Property Act be amended in order that pension plan assets be classified as fami ly assets to be sh ared equally. The fact that British Columbia and Saskatch ewan have been successful in this regard should prompt the Gover nment of Manit oba to fully review those provinces' respective procedures and legisla-

Thursday, 17 June, 1982 tion as a prelude to such reform in our province. lt is worthwhile to note that the Canada Pension Plan allows for pension cred it spl itting between spouses at the time of div orce. "The Manit oba Government should also, No. 2, tab ulate and assess the numb er of court decisions in Manitoba which have provided for equal sharing of pension assets si nce our recent Family Law Reform. "In our view, pensions ought to be regarded as fam ily savings held in trust, a long-term family invest ment. Mr.

Ju stice Monnin states that no one can place a market value on a personal pension fund in light of the rest rictions of Pension Benefit Acts, the reby resu lting in no market demand for such a nonvaluable asset. "Clearly, a major response and recommendation to his concern would be, No. 3, to alter The Provincial Pension Benefits Act to allow for some abilit y to equally divid e pension assets. A second response is that non matured pension assets do have a value to the contrib utor recipient and to the family unit.

Obviously , the pension assets in question in the lsbis ter case were in great demand by both Mr. and Mrs. lsbis ter. "Mr. Justice Monnin states that pension benefits are income to be earned in the future. The YWCA prefers to view pension contributions as income or actual wages earned durin g the course of em ployment and marriage which are formally saved and earning inter est for the future. Pensions by necessity are a product or asset which dis tin guis h themselves by a mandatory period of saved contributions during one's years of emp loyment .

This character istic of a savings plan of deferred income, which both spouses in a family unit choose and sacrifice to enter for their mu tual benefit, should not be used to penalize eithe r spous e at any point in their lives. "The YWCA reco mm ends that No. 4, The Marital Property Act be specific in its alteration to allow the courts to deter mi ne current cash value of pension assets and order equal divis ion of said value at the time of di vorce, or defer payment of the cash value at di vorce until the plan benefits are realized.

Loss of empl oyment by or death of the contrib utor, or pension fund bankruptcy after di vorce are unforese eable events which could as eas ily happen before di vorce as after. The poss ibil ity of these events should not be used to penalize nonmemb er spouses. "lt is uncle ar as to how and why both courts estab lished the pension assets in the lsbis ter case at a total of $35,000, drastical ly lower than the range of $53 ,000-$90,000 esti mated by an actuary, or two actu aries, in court. The "spread" caused "suspi cion, " as was quo ted in the media, in the court.

Cle arly, and this is point No. 5, the court requ ires an im proved method for accurately obtain ing and process ing comple te financial data, whic h is so crucial in dete rmining mari tal property di vision. "lt is obvious that the extre mely low value of the pensions derived by the court in the lsbis ter case will likely work to the advantage of the pension plan memb er, Mr. lsb ister, and to the further dis advantage of Mrs. lsb ister.

Not only does the $35,000 pension value, ascerta ined by the court, coi ncidentally equal the wife's $35,000 investment portfolio, but it also in all probabil ity would increase su bstanti ally to the levels quo ted by the actuary.

Of course, that will take place 26 after the marital property has been divided and the lim itation period for appeal by a spouse is exhaus ted ." lt is our suggestion that the previously noted sec tions of Bill 15 be dele ted and that deline ated guid e lines be estab lished for the court to deter mi ne pen sion value at a marriage breakdown in a consis tent, objective and professional fashion. British Columb ia has developed one formula for such competition in its jurisdiction which appears to be wo rking we ll.

I might just point out to you in case you're interested in the formula that they use, in those plans where the plan is vested, they take the numb er of years that the marriage has lasted, di vided by the numb er of years that the contrib utor has contributed, mu ltiply that by one-half of the monthly benefit ex pected at age 65 in that particular plan and then that amount would be divide d.

In Manit oba's own Pension Benefits Act, provision is made to estab lish the comm uted value of pension assets which appears to offer another alternative and I quote from an item written by a local pension consul tant, Janice Penner: "Under The Pension Benefits Act of Man itoba, each memb er of a pension plan is req ui red to receive annu ally a state ment of her entitlement under such plan. For most people, the promise of an amount at age 65 means nothing in today's terms.

However, using actu arial assu mptions, such as those used in the triennial valuation required under the Act, and an accepted formula, the present value of that entitlement can be calculated. This present value is often referred to as the comm uted value of the pension. In simp le terms, the commut ed value is the amount of money requ ired at the date of calculation to provide a person with that specified entitlement at age 65. "When talking about splitting pension assets on di ssolution of marriage, the question arises, how do you deter mine the value of a benefit which isn't paya ble until age 65?

This qu estion is not applic able in the case of a mo ney-purcha se pension plan where the amount of the pension at retirement is dependent upon the accumu lated value of the contributions at the age selected for retirement. In this case, by split ting the contributions accumula ted to the date of the di ssolution of marriage, in effect, you have split the amount of pension earned to that date. The analogy would be to the spl itting of mon ies held in a bank account, a joint bank account.

"In the case of a defined benefit, i.e., career average, fi nal pay or flat benefit plans, the value of the benefit payable at age 65 can be det ermi ned in today's terms. This is already in practice where a termi nated emp loyee transfers the com muted value of a deferred pension entitlement to a locked- in RASP. "To calculate the comm uted value, the plan ad min is trator calculates a present- value factor based on the individual's age and the most recent actuarial assump tions used in evaluating the pension plan.

This factor is appl ied to the pension benefit which the indi vidual has earned to date to arrive at the comm uted value. The comm uted value is then equal to the amount of money which would have to be set aside at the rate of interest specified to provide that pension benefit at age 65." In case this is a bit confusing, I do have some extra copies of this explanation. To illustrate, assume Mr. X has earned a pension

Thursday, 17 June, 1982 benefit of $300 a month or $3,600 a year at age 45. Accord ing to the terms of his pension plan, this amount will be payable at age 65 for life with a guaran teed period of five years. The actuarial assumption specified in the most recent valuation where an inter est rate of 6.5 percent per annum and mortality accord ing to the GA 19 71 Mortality Table for males.

Based on the above information, the plan adminis tra tor calculates that the prese nt-value factor is equal to 2.5874; therefore, the comm uted value of his pension would $3,6 00 times the 2.5874 figure, equa lling $9,314- some-odd dol lars. This means that $9,300 would have to be set aside at age 45 accruing interest at 6.5 percent per annum to provide Mr. X with a pension of $3,600 per year. To split his pension, split the comm uted value at the desig nated date.

Clearly, Bi11 15 is needed as an interim measure to assist many separated spouses who are currently fac ing no pos sibili ty of equal sharing in pension assets for which they sacrificed. With our recommendations, we belie ve those spouses, the majority of whom are women, will have increased chances for receiving equitable sharing. Ulti mately, the pension reform goals of the current government will have to address the long-term pen sion needs of these women.

For spouses to truly share in pension assets, methods will have to be investi gated for splitting of pension credits between div orc ing spouses along the model, perhaps of the Canada Pension Plan, computation for divorcing couples. In this way, the long-term pension needs of women wi 11 be acknowledged, as opposed to the pos sibi lity of cash set tlement at div orce in lieu of ongoing invest ment in some pension vehicle for those women. The current statistics about the num ber of poor elderly women in Canada today are scandalous.

That of people 65 and older, approximately three ti mes as many women as men, are poor in this age group.

The majority of these women have found thems elves as victi ms of a pension system which gave and largely still does give no opport uni ty for recog nition of their work contribution to our society which penal izes women for bearing and raising chi ldren, which is still willing to promote the attitude found in many laws and courts, being that at di vorce: "She takes the child ren · and he takes the pensions." In fact, the Canadian Advi sory Council on the Sta tus of Women in their most recent fact sheet entitled "Women and Pensions" and I quote from here: "In exchange for a life of raising chi ldren, homemaking, interrupted employment and infrequent lei sure, a woman can expect less than $4,500 a year in pension benefits.

Her husband will likely receive $7 ,000 or more." The Winni peg YWCA urges this commit tee to amend this interim bill in order to beg in now the task of equalizing those statistics. Thank you . MR. CHAIRMAN: Thank you , Ms Cordes. Do you have copies of your prese ntation? MS G. COR DES: I'm sorry I do not. I do have copies of the comm uted value discussion. MR. CHAIRMAN: Could you gi ve a copy to the Clerk 27 and she'll reproduce that for the comm ittee? MS G. CORDES: I also, if you wish, have one copy which I'll be able to leave of our YWCA subm ission conce rning the lsbis ter case from which I quoted. MR.

CHAIRMAN: Are there any questions for Ms Cordes? Mr. Penner. HON. R. PENNER: Thank you, Mr. Chairman. First of all, I would like to thank Ms Cordes for her brief and her support of the general thrust of the bill.

I think in looking at the numb er of persons who want to make pre sentations on this bill this morning and we have here a continuation of what has become an important process in the development of legal policy and law in the Province of Man itoba with respect, at least, to family law and that is the intents and informed invol vement of signifi cant elements of the commu nity and that's very good. it's true that what we have here mi ght be conside red an interim measure to deal with the lsbister problem.

A modest proposal, it was not possi ble, given the intricacies of The Pension Benefits Act and the problems that are associated to try and look at a solution for lsbister in terms of amendments to The Pension Benefits Act and thought it better to take a longer, much more careful look at The Pension Act before amending it. Hope fully, there may be major revisions to deal with the ki nds of problem you've identified.

I want to just ask you three questions: one, you indi cated concern with the phrase in proposed Sec tion 8.1 (1 ), that's No. 4 of the bill, de aling with the question of no reasonable pos sibil ity; that is, leaving it to the court to say that if there is no reas onable possi bil ity of the asset ever being realized, then it would not be included in evaluation.

Ms Cordes, what if there is no reasonable possibility and supposing that the re is a paper value of an asset of the kind that we're talking about, $50,000, but the re is the evidence, satisfies the court, that there is no rea sonable pos sibil ity that it will ever be realized, do you think it fair that the other spouse, the respondent, should have to be debited with $50,000 of something that will never be realized? MS G.

CORDES: I think what our main concern is we wou ld like to see in the future, again we're talking about long-term, in terms of wider pension reform goals, that we will be thin king in terms of women continuin g on with pension credits. So we're talking about, I guess, looking at paper figures and not necessar ily having to quo te cash-in at the tim e of div orce and splitting pen sion assets at that point.

I guess our particular feeling is to delete that particular part from the bill and if a judge finds no way to be able to di vide the assets after we have provided that judge with gui delin es, then that may be a pos sibi lity, but I feel by stating it here in the Act we're just offering, for the want of a better word, perhaps poss ibl e loopholes that may in fact be used. HON. R. PENNER: I have a num ber of examp les and would be pleased to provide them to anyone of situa tions which are real situations. One, in fact, I' ve drawn

Thursday, 17 June, 1982 out of recent events in which there was no real possi bili ty of an asset ever being realized of the ki nd that we're talking about which is wider than mere pension rights. Some of them are insu rance rights in which it would be clearly inequitable to debit the respondent with an amount that is purely a paper amount. MS G.

CORDES: Perhaps if I could respond that I think that the pension ind ustry from my personal point of view will have to take a look at ways in which plans are designed. lt seems to me - I bel ieve at one point you used the example yourself of, let's say a contributor has a te rminal illness and is not expected to live a year or two past the end of the marriage - if that contri butor had contribut ed over a wide numb er of years, X amount of money to that plan, one wou ld think that the estate or the spouse or that someone should be able to have the benefit of those particu lar monies regardless of whether that contribut or die d or not.

I belie ve that whole area needs to be looked after. lt doesn't seem right that a person would go through a marriage of X numb er of years and then have that particu lar situation arise, the spouse who shared in that marriage not being able to gain any advantage from contribution towards those assets. HON. R. PENNER: Let me ask you to comment and this will be my final suppleme ntary on that point. On this example, which is very analogous, very sim ilar, to some recent events, take the case of a spouse who has been for many years paying into an insu rance plan through an emp loyer.

The emplo yer has run into financial di fficulties and through no fault of the emplo yer, let us say, but through the way in which the busi ness has been managed or mi sm anaged has mi ssed a numb er of prem ium payments to the insu rance company which results in the cancellation of the policy. The emplo yer goes bankrupt and has no funds. The insurance company will not relent and refuses to pay.

Now, while the spouse may have a right of action against the emp loyer, or even against the insu rance company in certain circums tances, there is really no reasonable possibi lity that the spouse will ever recover what is owing unde r that policy. MS G.

CORDES: I guess my response is, is it right then to leave this particu lar, again, loophole, I will call it, with in the Act to be able to handle those cases which I pers onally feel could perhaps be more the exception than the rule, rather to take it out and to allow judges to handle those situations when they do arise and to say to the pension and insurance indus try that perhaps they will need to look at again the ways in which these particu lar kinds of pension and in surance schemes are estab lished and the ways in which they are polic ed to not allow these particular kinds of thi ngs to happen? HON. R.

PENNER: I wo uld agree just leavi ng the point that there ought to be something that is done through legislation to police the indus try, whether it's the pension indus try or the insurance ind ustry, to protect persons in such a situation but in the mean time one shouldn' t penalize an in nocent party. MS G. COR DES: I can't see by deleting this particu lar 28 sec tion that those particula r people wou ld be penal ized.

Again, it doesn't seem right and perhaps when I'm talking about the kinds of thin gs that judges mi ght look for to use as a reason for varying the equal di vi sion of the pension assets, I'll get back to your original comment about The Pension Benefits Act. I under stand, of course, that this government is wanting to do major reform in that area.

I think I have some concern that if we don't simul taneously amend The Pension Benefits Act that in fact a judge can again point to The Pension Benefits Act, the sec tion saying that pension plans cannot be att ached, et c., as a reason for not allowing equal sharing of pension assets, even though we have stated in this Act that they are to be conside red family assets. MR. CHAIRMAN: Mr. Penner. HON. R. PENNER: Reference was made in your sub mis sion to the B.C . legislation and some research that has been done by someone on the B.C. legislation.

I have had the B.C. legislation researc hed and I can't fin d in it any provision of the kind indic ated by you. I haven't been able to find anything in the B.C. legisla tion, that is The Fam ily Relations Act, on the su bject of valuation of marital property for purposes of the di v ision. The B.C. Act in fact appears to leave the aspect of valuation entirely in the hands of the court, so I'm not sure what you are referring to when you talk about research on B.C. legislation. MS G. CORDES: You're correct in that the Act does not specify any set formula or guideli nes. lt's pretty open .

On this same hand, they do not offer any kin ds of sections or loopholes, as we feel this particu lar bill does, that would allow them to vary. We came about this formula by contacting a lawyer in the Province of British Colu mbi a to ascertain just what general trends are happen ing, what di rection the court decisions are taking as a result of their Fam ily Relations Act, and we understand that this particular formula has appeared to be workable in qu ite a numb er of situations and some people appear to be pleased with how it's working. HON. R. PENNER: Yes, I think that's right. What has happened is that in

an Act which in fact has left it comple tely to the dis cret ion of the judges, the judge s, because they mus t rely on expert evidence in arriving at principl es of valuation, have developed princip les of valuation that have become a precedent and I see no reason why that wouldn't happen here. I don't think the judges in Man itoba are really any di fferent than the judges in B.C. and we' ll mon itor the situation and see what happens. MS G.

CORDES: I guess our concern is that we do have the benefit of experience in other provinces and we're bringing it forward to say let us perhaps look at this a little bit more clearly in terms of what kind of foundation we can launch from, so we can benefit from their experience and, again, this seems to be workable. HON. R. PENNER: My last qu estion, Ms Cordes, relates to the poin t you made about 14 (3) when you

Thursday, 17 June, 1982 were expressing conc erns about judicial dis cretion, which reads in its present form, "Where an asset is by its nature not a marketable item, subsection (2) does not apply and the value of the asset for the purposes of subsection (1 )" -t hat's both these subsections being of the original Act - "shall be determ ined on such other basis or by such other means as a court deems appropri ate for assets of that nature." Would it make any dif ference, in your view, if the

section read, "not as a court deems appropria te but as is appropria te?" MS G. CORDES: I don't know that it would make all that much di ffere nce. To me, I think it's a

section that is there that can be used as a reason for not allowing equal sharing. Perhaps you could ask other people who would be speaking from a legal expertise. HON. R. PENNER: Thank you very mu ch. MR. CHAIRMAN: Are there any other que stions? Mr. Manness. MR. C. MANNESS: Thank you, Mr. Chairman.

I' d like to ask as someone who really doesn't have a thorough underst anding of this whole area, but as one who is not a raving optimis t as to the viabil ity of many of the pension plans in ex istence, particu lary through the econom ic consequences that may be su ffered over the next little while and again, when I say viabil ity, I mean some maybe 10 or 20 years hence. I'm wondering which approach in a general, broad way you are suggesting or advocating.

I'm wondering if you are suggesting computing a cash value now and expecting one spouse to pay out today that cash value, or are you saying that the split can be made now and the two parts remain vest ed; the refore, both may su ffer the same bad consequences should they occur and hopefu lly they won't. Which are you advocating? MS G. CORDES: I think the second option that you put forward is our long-term goal.

I think the first option that you put forward in terms of determ ining the cash value for an interim measure is better than what is happening now in the Manit oba courts, but clearly I think the second option is the long-term goal we'd like to see; but I don't see that's pos sible to bring it in this short of a ti me, given the fact that we want to look at pension reform in general and perhaps work on it as a package. MR. CHAIRMAN: Are there any further questions? Thank you, Ms Cordes. MS G. CORDES: Thank you very much. MR. CHAIRMAN: The next person on my list is Ms Jill Ol iver.

There is a brief that's been made available and it's being circulated by the Clerk. MS J. OLIVER: Good morning. I'm here represe nting tile Manit oba Association for Rights and Lib erties, which is a nonprofit citizens' group ded icated to the protect ion of hum an rights and civil liberties in Mani toba. Its Legislative Review Commit tee has reviewed the provisions of Bill 15 , which is

An Act to amend The Marital Property Act, and offers the following corn- 29 ments and suggestions. The main purpose of Bill 15 is to amend The Marital Property Act as it relates to rights of spouses under insu rance policies, annuitie s and pensions, which are intended to benefit the holder of those polic ies, annui t;es and pensions and his or her spouse. Bill 15 redefines these assets in

Section 1( 2) as family assets from their previous classification as commercial assets. Famil y assets are defined in the statute as assets owned by both spou ses or by either spouse and are used for shelter, transportation, household and other purposes intended to benefit the famil y as a whole. Commercial assets are assets that are not famil y assets and which earn an income, such as a busine ss interest and investments owned by one or both of the spouses.

The Act provides lim ited di scretion for the court to vary the equal di vision of family assets, while provid ing a greater dis cretion to vary the equal di vision of commercial assets. The reclass ification of insurance policies, annu ities and pensions from commercial to family assets therefore limi ts the dis cretion the court has in dividing these assets in other than an equal manner between the spouses in the event of marriage breakdown.

MARL su pports this change to the statute which would avoid in the future, we hope, si milar decisions to that made in the Kozak case in 19 81 , in which the judge refused to allow the wife any share in the hus band's pension, because the pension was not consi dered a family asset. Bill 15 provides that assets consisting of rights, either present, future or contingent as in insu rance polic ies, annui ties or pensions, which may not have been realized or are not ascertai nable at the date of valuation, are sti ll su bject to an accounting unde r

Section 14 of the Act, unless there is no reasona ble possibility of the rights ever being realized. The bill seeks to remedy the kin d of situation which arose in 19 81 in a recent case, lsbister, where the Court of Appeal found that a pension could not be shared because it had no marketable or assignable value. We are in suppo rt of this provision, which we be lie ve gives a realistic value to the pens ion as property for the purpose of sharing between the spouses. We are concerned however by the provisions in the new

Section 14 (3), whic h allows the court the di scre tion to dete rmine how assets such as pensions, insu rance polici es and annuities should be valued and di vided. We think that there should be some guidance for the courts as to the criteria to be conside red in dete rminin g values. I beli eve the YWCA, with Ms Cordes, has very clearly outlin ed some of the guid e lines that could be used in that regard. Finally, we are in supp ort of the amendment to Sec tion 20 and the provision that an Order may be made for the preservat ion of assets.

This is a positive step in preventing the liq uidation and di ssipation of assets before, during and after separ ation, but before div ision. The amendment provides greater assurance to the clai mant spouse that the assets will not simply dis appear or be di vested. In conclusion, we agree in general with the amend ment, but our concern is that the Act provide some criteria as guidance to the courts in dete rminin g the values of assets such as pensions, insurance polici es

Thursday, 17 June, 1982 and annuit ies. Thank you. MR. CHAIRMAN: Thank you, MS Ol iver. Are there any questions? Mr. Penner. HON. R. PENNER: First of all. let me thank Ms Ol iver and MARL for the brief. it's an excellent brief ident ify ing a couple of concerns that have already been dis cussed.

As you will have noticed in the exchange between myself and Ms Cordes, the experience in B.C., which has no criteria built into the Act, seems to have been that over a period of time with evidence having been presented as it must in the nature of things by experts to the courts, the courts have devel oped what appear to be widely accepted criteria. lt is our hope that will develop here and we' ll see what happens. In any event, as ind icated, The Pension Bene fits Act will be examined in some depth. My only que stion then, Ms Oli ver, really relates to

Section 14(3) and I' d like to put the same question to you as I did to Ms Cordes, having to do with 14(3). Would it in your view make any difference if instead of the clause "or by such other means as a court deems appropriate for assets of that nature," if it were to read. "or by such other means as is appropriate for assets of that nature?" Do you see some dif ference between those two formulations? MS J. OLIVER: Yes, I do. I think prima rily because, again, should we be able to present actuarial evidence as to disposition and valuation of such as a pension plan. the courts really can di sregard it.

In fact, that is exactly what happened in lsbister and we are very very concerned that could happen again. I wou ld certainly prefer for the changed wording, rather than have it up to the court to dete rmine how those assets be valued, that certai nly whatever evi dence is presented would have to be accepted and not simply dis regarded. HON. R. PENNER: Thank you. MR. CHAIRMAN: Are there any other questions? Mrs. Smi th. HON. M. SMITH: Yes. Ms Oli ver. I wondered if you would care to propose some of the criteria that you would see as appropriate to give a court in guidance on their dete rmi nations under 14(3)?

MS J. OLIVER: Wel l, I certainly feel the process that has developed in British Colum bia. and I think there are a numb er of cases that sup port this and can pro vide precedents for dete rmining how a pension plan would be split, I think are very ad mi rable and I wou ld hope that our courts here -I wou ld certainly again like to see something along these lines established as criteria for dete rmi ning values.

For example, the formula that is being used, where you have the num ber of years of the marriage over the numb er of years of the term of the insurance of the pension plan time s one-half , wou ld actually come up with a reasonable div ision of the actual asset. Now, that cou ld be determined in I su ppose a cou ple of 30 ways; either that the division would take place at the time the pension is actua lly paid out or it can be determined on the basis of a present disposition or division of the pension plan.

I think that the re are some problems with a lump sum payment if there are no other assets that could be offset. I think that this is something that was touched on earlier. I think I'm of two mi nds of that. In many ways, I would prefer to see the payment of the pension plan and the division take place at the time it's paid out. hoping certainly that the spouse is going to last that long.

The reason for this is because the majority of women and certainly women who have been in the home most of the ir lives do not have a pension plan, they do not have any pension income to look forward to, and I think that this at least gives them some income down the road when they most need it; I would certai nly think that in a simi lar manner to the way the Canada Pension is divided, for example. There is another suggestion that has come about in di scussions with other lawyers and that is the diffi cu lty, I think, that Mr.

Penner raised earlier with valu ing or trying to est ablish a value on a pension plan that may not have any value at any partic ular time. One of the suggestions that has been made with regard to that is that a value cou ld be placed on it by trying to dete rmin e what it would cost. for example, with a woman in purchasing a comparable pension plan that woui d yield her a comparable amount unde r the pen sion plan.

So, for example, if the pension plan that has no realizable value at this point in time was going to yield maybe $500 at age 65, then what would the cost be to that woman to purchase a pension plan that wou ld yield her $250 at age 65? So that, we felt, was another way of perhaps est ablishing a value. Now, again because the question is whether or not it wou ld be fair or unfair to pay out or to have the hus band pay out a lump sum at that time, that cou ld also perhaps be offset by est ablishing another asset of comparable value, but you sti ll have to est ablish a value.

Those are some of the suggestions that I have. HON. M. SMITH: Yes. just one suppleme ntary ques tion. If you were having to recommend on whether there would be an imme dia te div ision or a deferred division. would you prefer the principle of choice or would you rather there be a specific criterion named? MS J. OLIVER: I guess I really would prefer the ele ment of choice.

That particularly stems from - and it would be the choice of the parties or certainly the choice of the claimant - and to some extent. there would have to be the ability of the payor spouse to actua lly provide an amount of money or an equal asset. The reason be ing that. while on the one hand I would prefer to see the spouse knowing that perhaps she has an income sometime down the road that oth erwise she may not have. for many people and cer tai nly in my experience. the dif ficulty lies in the whole notion of continuing to be tied to a spouse from whom you are doing your best to become untied .

That does present a problem and I thin k for many people. if they feel that 20 years down the road they're still going to have to go back and start getting money from this

Thursday, 17 June, 1982 person, that could create a great deal of trauma, I think. As I said, my preference would be in many ways to have that paid out because I think that's when they need it is when they're past retirement age; but on the hand, recog nizing whe re people are in this situation, I think probably an element of choice should be included. MR. CHAIRMAN: Are there any further questions? Mr. Santos. MR. C.

SANTOS: Ms Ol iver, in your conclusion, you stated that you had some concern as to some criteria to guide a court in dete rminin g the value of the assets such as pension, insurance policies and annuities. Do you have any ideas as to what these criteria are? MS J. OLIVER: I think I went through some of those ideas earlier. As I sa id, I think one of the methods could be that there is a formula that had been devel oped in British Columb ia that I think is very useful and I would certa inly hope that the courts can be di rected to use eithe r that criteria or even one that is even better.

I don't know whether there are better ones, but whatever is most ap propriate and most fair. This would est ablish a division of the asset based on the years of the marriage over the years of the life of the pension plan ti mes say one-half, assum ing that it's going to be eq ually divided. Now, that division of that split could take place at the time that the pension is actually paid out, for example, at age 65 if that's when it is. That would give each spouse some pension income at that time.

Now, the other method, of course, is to pay out a lump sum amount at the tim e of the actual separation or div orce either by paying out a lump sum of money or by offsett ing it by another asset of equal value. That is one method that can be used and I wo uld certa inly urge either the Legisla ture to give dir ection to the courts or at least strong pressure being put on the courts to consi der that kin d of splitting. MR. CHAIRMAN: Any more questions? Thank you, Ms Ol iver. MS J. OLIVER: Thank you. MR. CHAIRMAN: Mr. A.L. Clearwater. Do you represent anyone or are you ju st a private citiz en, Mr. Clearwater? MR.

A. CLEARWATER: I'm appearing just as a private citizen, as a practising lawyer, who represents from time to time all sides to the particular question dealt with by the bill. My comments will be very brief and limi ted to what came up at the end of the first presentat ion. I have no quarrel as a lawyer with the concept of the equal di vision nor of the reclassification of pension plans in the family assets if that's the will of the people.

But the bill as it presently stands, I submit, does not deal with what I conside r to be a great inequity and the inequity which the Court of Appeal tried to deal with and I perhaps did not do it the way all of us would have lik ed it to have been done in the lsbis ter case; that is, pensions can be valued. There is no question of that. I 31 don't know that it's necessary for the Legislature to set methods of value, actuaries, insurance companie s. Busi nesses have been valuing pensions for years and will continue to do so no matter what's set down in this bill. They can be valued. That's not the problem.

The problem is what has been spoken to and that is, should a person be forced to come up with cash or money's worth now and div est hims elf or herself of it now when he or she may or may not get the value that's dete rmi ned from that plan or part of it in the future at an ind ete rmi nate time? That's what's unfair and unfortunately the bill as it's drafted has the effect of moving pension plans into the family asset field, thereby limi ting the di scret ion of the court even more than it's lim ited under the commercial asset

section to do anything other than order a division and order a payment or a transfer of assets. That's unfair and that, I subm it, should be dealt with now. That's not some thing that can be left for later. That's an imme diate pressing problem to every person who finds hims elf or herself in this situation. The payment in whatever form it mi ght take, it is unfair to order or dir ect that payment be made now from othe r assets. A pension is a particu lar special type of asset that's to provide for some security for people in their old age.

That's all it ever was and that's all it is. it's not fair to have a person take other capital and div est hi mself or herself of it now and take a chance on what he may or may not get in the future. it's true what has been said before that perhaps some further overall pension reform is needed.

I think the comm ittee should give serious consideration to the concept that's been dealt with for several years now in The Canada Pension Plan Act because I sub mit that if you're going to have an equal sharing, the Canada Pension Plan is just a pension the same as any other pension. lt happens to be funded by the gov ernment and in other ti mes people felt that was secure. lt may or may not be the case.

At least it clearly deals with the concept in what I submit is a fair way; that is, at the tim e of the marriage break-u p, the contributions are in effect valued, but no one gets that money or money's worth until they're entitled to it, that is, until their old age. That's fair, but what's being done by this bill is not fair, I subm it. My com ments are di rected only to those pension plans that can't be, for lack of a better word, cashed now.

My com me nts are not di rected to RASP s which is a com mon form of pension plan or investment for people or to some empl oyee/ employer plans which can at the option of - there are very few of those or at least in my experience I' ve seen very few, but occasion ally there are some other forms of plans that you can if you wish elect to take your money out of the plan, pay the tax, whatever the consequences mi ght be and divide it up.

No qu arrel with those kinds of plans, but unfortu nately I think the main effect on most people in our com mu nity is the unfortunate effect that this bill is going to have and that is, it's those plans that are locked in. You can't get your money out and I say you shouldn' t be requir ed to div est yourself of capital now. I think the previous two speakers have also in gen eral dealt with that issue and they were given the two alternatives, I belie ve, by one of the questions and one of the speakers said, well, she wou ld prefer that be a question of choice but, frankly, that doesn't deal with

Thursday, 17 June, 1982 the issue. There's no choice in these situations. Mar riages don't break up between two happy people and if it's goin g to be choic e, I think the suggestion was it wou ld be the choice of the clai mant. That's not choice. The fact is I think that the comm ittee has to direct itself to that inequity and it is an inequ ity to require anyone to take cash and pay cash, now whatever that might be dete rmi ned, whatever the amoun t mi ght be, pay cash now. it's a pension plan; it should be left as such and it can be done. it's done under The Canada Pension Plan Act qu ite simpl y.

There's no reason it can't be done, I think withou t any particula r sign ificant amendment to The Pension Plan Benefit Act in this statute. That's fair. Thank you. MR. CHAIRMAN: Are there any questions? Mr. Penner. HON. R. PENNER: Thank you, Mr. Clearwater, for your present ation. You've certa inly identified a prob lem with which we're concerned and we looked very carefully at the CPP, Canada Pension Plan, mecha nism but thought it wiser to deal with our Pension Benefits Act as a whole rather than piecemeal. Wou ld you not consider - or let me put the question more directly - do you think that

Section 19(1) of the Act, as it prese ntly is and I'll jus t read it, may in the meantime deal with the kin d of problem you identif y?

Section 19(1 ) of the Act as is reads as follows- and I'll foreshorten it a bit - "Where a court makes an order or gives judg ment against a spous e for the payment of money or the transfer, conveyance or deliv ery of an asset and the court is satisfied that imme dia te com pliance with the order or ju dgme nt will work a hard ship upon the spouse or is otherwise inexpedient, the court may order that the payment be made by instal ments with or without interest or may otherwise allow the spouse such time with or without interest in which to com ply, etc." Is n't that something of a safeguard in the meantime? MR. A. CLEARWATER: That

section could be used by the court to alleviate the inequit y. Unfortunately, there just haven't been enough decisions yet de aling with the problem in the lsbister case, sort of cut off the problem comple tely, and that of course is the reason for the amendment to the bill. But having said that, I really don't feel that it's fair sti ll to leave that particu lar dis cretion in the court with respect to those pension plans of which I'm spe aking. You just should not have to pay capital, tax-paid capital now for something you may or may not get in the future.

In situations whe re there is lots of money in a fa mi ly, it isn't as big a problem; in situations where the re is no money in a family, it's not a particula r problem eithe r, quite frankly. People have other problems. Whe re it is a problem though is in the ordina ry average working class family in his province, people who have been married for 10 , 15 , 20 years and people working at a job with an emplo yer pension plan. The main two assets in terms of values probably are in the majority of situations, a home, if they have one, and the value of this pension plan to be dete rmi ned .

The legislation, the way it's drafted now, leaves the court very little di scret ion. it's true, the re may be some found in that section, but it almo st says to the court 32 that you've got to pay for that pension plan out of your share of the home, you 're left with nothing and you 'll get a pension when you're 65. Now that's great, I'm 40 and, by the way, I don' t have this personal problem because I don't have a pension plan. I'm self employed. HON. R. PENNER: I can't help but remember the statement of Zsa Zsa Gabor, who you know, was mar ried 9 or 10 ti mes.

She said that her mother taught her to be a good hous ekeepe r, namely, whene ver she left the husband to keep the house. MR. A. CLEARWATER: I feel that people should be entitled to keep half, that's all, and thi s bill won't do it with the present attitude to the court. MR. CHAIRMAN: Mrs. Smith. HON. M. SMITH: Mr. Clearwater, I guess I'm not comple tely persuaded by your argument on the injus tice of the current state of the law. I guess for these reasons, I' d appreciate your comment on them.

I assume that if there have been contributions made to a pension plan that they've come out of the total income that family unit had and that contribution to a pension plan purch ases protect ion; that both spous es in a sense are entitled to an equal amount of protec tion whethe r or not either one lives a long life and is able to realize a pension or not. lt seems to me that the justice in and of at the moment of separation or dete rmin ation by a court should look at the fact that the payment has come out of the combin ed income of the unit and that the right of each spouse to protection should be equ al.

The fact that there is perhaps ins uffi cient money in the uni t to make economic conditions easy or even possible in some cases, I think , is another issue. I think it's the equity issue between the spous es that we're attempting to address in this legislati on. So I guess at the moment I can't qu ite follow the logic of your argument. MR. CHAIRMAN: Mr. Clearwater. MR. A. CLEARWATER: I think perhaps you mi sun derstood me then, because I don't dis agree at all with what you said, pension plans are protection for the future and that's all they are.

They are not like any other investment that's going to be divide d up now. I'm saying that both spous es should have the protec tion that's been paid for during the period of cohabita tion, durin g the marriage. What I'm saying is you shouldn' t have it now, one or the othe r, neither one gets it now, neithe r one can get it now, but this legisla tion is going to give it to one now. That's what I'm saying. I agree comple tely and I belie ve that's what the Canada Pension Plan legislation is intended to do; that is, when there is a separation, the one party's share becomes the one party's share.

That is, that's now the wife's pension plan, if she's the person who stayed at home and hasn't contribu ted, she has it, it's vested and when she's pensionable age, she gets what her share is worth in the plan. I don't dis agree at all, I wasn't suggesting otherwise, but what your bill does is otherwise. lt says you've got to pay it now out of other assets, prima facie, and I appreciate that there's

Thursday, 17 June, 1982 a bit of dis cretion but. unlik e the previous two speak ers, my experience is, very frankly, that the courts aren't that inclin ed to vary from the equal division payment now and get rid of this relation ship. You can get rid of the relationship under the princi ple that I'm proposing, that part of the plan that's valued and that becomes the one party's is now the one party's. it's got nothing to do - there's no payment. When they reach 65, the one party doesn't have to go to the other and ask for half the money.

Not at all, that I agree in the relation ship s I' ve seen, that would be unworkable, we'd be back where we started from 20 years before. That becomes his or her pension and it's payable to her. it can be identified, it can be valued, it can be done and it should be done. I think it's fair and I agree with you that there should be a qu ality and equal protection. MR. CHAIRMAN: Mr. Filmon. MR. G. FILMON: Mr. Chairman, may I ask Mr.

Clear water, on the same point, is the di fference that he is pointing out between the pension value and every thin g else, even including the hous e, the fact that it is not pre-cashable in many instances and therefore it cannot be in fact turned into a liquid asset at the present tim e. Whe reas even with a home, there is the choice to se ll it and it's clear what the value is or to place a value on it, if somebody isn't choosing to sell it, but it is a saleable com modity as at any given date. This is not and it runs the risk, as was pointed to by Mr.

Man ness, of the possibility that it is nonviable and will not in fact prove to be worth whatever it's valued by any actuary or any busi ness or any insurance com pany at the present time, so that puts it in an entirely di fferent situation. The ulti mate and only fair way would be to have it vested at its present value eq ually in both people, so that they both take the risk of whethe r or not it's paid at that time or whether or not they live to benefit from it to whatever age is di ctated. That is a very great dif ference in this particu lar item and anything else that's includ ed in the whole Act. MR.

CHAIRMAN: Mr. Clearwater. MR. A. CLE ARWATER: That's right, I'm suggesting · that the type of pension plan of which I' ve been speak ing, not the ones that can be cashed, no matter whether it's emp loyee/e mployer or RASPs or what ever but only those ones which are, I think - this certainly affects the majority of the working people in the cou ntry and that's exactly right. it has to be.

I appreciate you don't want too many exceptions but, unfortunately, we're into an area where I think an exception has to be made for that type of asset to have some sort of fairness in the legislation. it's because you can't sell it or buy it now: if you could, I have no problem. MR. CHAIRMAN: Mr. Downey. MR. J. DOWNEY: Ju st to make sure I understand the point, Mr. Chairman, you're not arguing the princi ple of sharing the benefits of a pension, it's how and when the pension is paid out. That's pretty much the point of it really. 33 MR. A.

CLEARWATER: That's right. it's not my con cern that the pension may not be worth as much, although that is obviously a concern of everyone, that's an economic concern. it's not my concern though that it maybe worth less, you may not get the benefits you thought you would get no matter how much this actuary says it's worth now. That's not really my conce rn. I'll assume that they're correct and I'll assume that hopefu lly our pensions will have some value when we reach age 60 - no age - when we get older.

My concern though, is that what it was always to be, future protect ion, that's when you should get it and you shouldn't get it now. In fact, I don't want you to change the pension legislation and say that they're all cashable because weak people like myself would probably rather have a new car right now than a pen sion. We migh t cash all our pensions, that's not what I'm suggesting. MR. J. DOWNEY: Or bread on the table. MR. A. CLEARWATER: Well, that's possible. MR. CHAIRMAN: Mr. Santos. MR. C. SANTOS: Thank you, Mr. Chairman.

In other words, the spouse can get the right to a pension now, but not be cashed because it is yet an incorrect right; it is not yet realized until the maturity or the date. MR. CHAIRMAN: Mr. Clearwater. MR. A. CLEARWA TER: The spouse is entitled to that. He or she has stayed home and he or she has made her equal contribution: that is, that's money that other wise would have come to the famil y. So she's paid her share: just define her share and set it aside. MR. C.

SANTOS: May I make an observa tion that because of the advances in health and health care and medical care, people generally are living longer in this generation than the last generation and they generally will live longer and longer. That means that people are drawing more and more from our pension funds and there are less and less people putting in so even if you may have it right now, by the tim e you retire maybe there is no more money in the fund, so it is contigent on the future. Thank you. MR. A. CLEARWATER: That's right.

I'm concerned that may happen, but the poor guy who jus t pai d cash now is going to be stuck with that. MR. CHAIRMAN: Ms Dolin. MS M. DOLIN: I have a question, Mr. Clearwater. In this I will personalize to the extent that I happen to be the party holding the pension in my particular mar riage: my husband does not. If that were di visable and in the case of separat ion I did not live to 65, he would get no share of anything. Is that correct? Is that what you're saying? MR. A. CLEARWATER: That's right. If that's the pres ent term of your plan, if that is a term and condition of

Thursday, 17 June, 1982 your plan. yes. MS M. DOLIN: Most plans do not have survivor benef its: that's what we found and that's where so many elderly women are left out when it comes to pension plans. I'm wonde ring if . MR. CHAIRMAN: May I interject here? The Hansard recorder is having trouble identifying people. Could you wait until you're recog nized before speak ing? Ms Dolin. MS M. DOLIN: Thank you. I'm wondering if what you are saying is that the party who is waiting for the pension plan - both parties are waiting for that pen sion plan to mature at age 65 of the party that holds it.

Are you saying that the other party then must hope the person from whom they have separated or di vorced lives to that age in order to collect on the benefit? MR. A. CLEARWATER: No. that's not what's intended. What I'm saying is that plan. and to personalize it, your plan is now at the time of separation di vided and it's half of what it is now. what it's worth now, is now your husband's pension plan: whatever it's worth. If he makes it to 65 or 70 or whatever. he'll collect the same as you will and the same with you. If you make it to 65 or 70, you'll collect on your share.

Obviously, your share is going to be reduced, your pension will be reduced. but that's the natural effect of a di vision of property. MS M. DOLIN: One more qu estion. You feel that we do have the technology to handle all of th is? MR. A. CLEARWATER: Certainly, there's no ques tion. I bel ie ve it to be being done regularly under The Canada Pension Plan Act. I have some views on what I think should be amendments to that, but in principle it can be done. I don't think that's a problem. - (I nterje ction)- Oh certainly, legis latively it is possi ble right now. MR. CHAIRMAN: Mr. Manness. MR. C. MANNESS: Thank you.

Mr. Chairman. I think the last comment leads into a very short question. You say in princip le it can be done. In your view. me chani cally, can it be done? Can you see any great prob lems? Do you feel it's just a paper mechanism that would allow it or is it going to involve some thing much beyond that. someth ing that we can't foresee as far as a problem? MR. A. CLEARWATER: No. When I say in principl e. I mean mechanically it can be done by legislation now. it's effectively done by The Canada Pension Plan Act, the amendmen ts that were put in about 19 78, I believe, and with some modification it can be done.

You can do to the existing plans by legisla tion. what The Can ada Pension Plan Act does to the existing Canada Pension Plan by legislation and mechanically does it. MR. CHAIRMAN: Ms Phillips. MS M. PHI LLIPS: Thank you. Mr. Chairperso n. Mr. 34 Clearwater. I understand what you're talking about in terms of The Canada Pension Plan and deferred shar ing.

However, if an indi vidual has a private pension plan with an emplo yer, it's qu ite a bit dif ferent in that. when they change em ployers. unless that plan is locked in with 10 years and 45 years of age and they change emp loyers qu ite often. say for instance. du r ing the life of a marriage they had been involved in three di fferent pension plans. or two and had each of them locked in, wou ld there be some way that the spouse who was working at home could have that di vided and set totally aside separately, so that share stayed in that particular plan regardless of what the working spouse went on to do? MR.

A. CLEARWATER: Yes. I belie ve so. I would assume from your que stion that we're talking about a situation where during the course of a marriage, a person works at a job for 10 years and develops a pension plan. then moves to another job but that pen sion plan is not portable and stays where it was: yes. that's a definite plan, separate plan. lt was accumu lated during the marriage: it can be valued and set aside the same way that the Canada Pension Plan in effect is. The next plan can be done the same way, if another one and another.

If on the other hand they become portable; that is, he goes to the second job and the plan is moved over and amalgamated, which is often the case, then again that's no problem. lt becomes one plan. MS M. PHILLIPS: I guess I see several problems with deferr ing it.

I reco gnize the problem that you're bring ing up in terms of spl itting it and paying it out and the hardship right in the present that mi ght create for some ind ividuals; but in terms of defer ring it, unle ss it was spli t out totally so that regardless of what that working spouse went on to do and whether they cashed out a future plan, whether they had two other wives in the meantime, that the assets that indi vidual has would get paid out on her retire ment.

What if they chose to retire at dif ferent ages. if that's now the case in terms of not knowing that this indi vidual has to retire at 65, her pension would come to her regardless of whatever choic es the other spouse went on to make in terms of jobs or retirement age or remarriage or any of those kind of thi ngs. The dif ference between that and the Canada Pension Plan is regardless of what emplo yer that person works for, the contributions are sti ll in that one plan. MR. A.

CLEARWATER: Yes, I appreciate that. de aling with those situations where you move from plan to plan to plan, and I don't really bel ie ve that would be the majority of situations: but irrespective. that would cause what I describe as probably an accounting problem for empl oyers as well if there's a marriage break-up; but I suggest to you that accou nting prob lem is just that and that isn't sufficient in my mind to overcome the inequity of what's happen ing now. I think the accou nting problem can be worked out. but the unfairne ss of making someone pay cash now can't be, unfortunately. MR.

CHAIRMAN: If there are no further questions, I' d like to thank you. Mr. Clearwater. for your presentat ion.

Thursday, 17 June, 1982 Mr. Fil mon. MR. G. FILMON: I just wanted to clarify one of the referenc es that Mr. Cle arwater has been making. He keeps referring to the fact that it is poss ible to do this. What I'm saying is, does current legislation allow for the pensions to be split and vested as of a certain time to pay out at age 65 or whene ver, or would that require an amend ment parallel to that whic h has been made, as he referred, to The Canada Pension Plan Act? MR. CHAIRMAN: Mr. Clearwater. MR. A. CLEARWATER: No, current legislation, as I unde rstand it, does not provide for that.

Rather, it requ ires a specific amendment which I am suggesting is the specific amendment that should be in this bill, and again it has to be co-o rdina ted with the provisions of our Pension Plan Benefit Act but really that is an amendment that I submit can and should be provided in this specific bill. MR. CHAIRMAN: Thank you, Mr. Clearwater. MR. G. FILMON: Can I further ask, in view of the qu estions of Ms Phi llips on this matter and Mr.

Clear water referred to the acco unting problem, are we not de aling with the situation whereby most pension plans are based on an amount that accumu lates, that wou ld in fact purchase an annu ity that is worth so much per month at the time of retirement and, the re fore, that amount could be split, purchasing two annuities of equal value and ther efore retu rning equal value?

If there were this appropriate amendment that would vest it, then it wou ldn't have the effect of con cern as to which of the spouses was sti ll li ving, because whiche ver was sti ll living would be entitled to his share or her share pro rata. So that is all possible, given the proper type of amendment, you're sayi ng? MR. A. CLEARWATER: My answer to the qu estion is yes. MR. G. FILMON: Thank you, Mr. Chairman. Thank you, Mr. Clearwater. MR. CHAIRMAN: Lauranne Dowbi ggin. MS L. DOWB IGGIN: Good morning. I'm from the NDP Status of Women.

We're concerned about this but I'll warn you , we haven't done an awful lot of researc h, so don't ask real deep questions afterwards. The thrust of this amendment that makes pensions a family asset is applauded. We comm end the Attorney-General for developing this amendment so qu ickly. lt demons trates to us that the government understands the seriousness of this issue. We have two major concerns about this amendment, Sections 8.1 (1) and

Section 14 (3). We vie w

Section 8.1 ( 1) as an enormous loophole that wou ld allow the court to decide to not make a ruling in a difficult or awkward case. We have lsbis ter versus lsb ister, as I' ve heard you've heard qu ite a bit about this morning, as an exam ple of this. In another end of the spect rum, we can see many scenarios that 35 could be presented to the court and may be accepted; like an old or a mi ddle -aged couple could use medical evidence saying that they will expire before 65 and therefore the pension has no value. This

section could be used to deem the asset at zero value and therefore there is nothing to equally divid e. If this

section is to protect the court and the family, then guideli nes must be inserted. lt is reasonable to set gui delin es to clarify the intent of the se ction. Our strongest opinion is that the

section should be totally dele ted. In cases that are vie wed as extreme and value would not be realized, the court can assign a $1 value and satisfy the intent of the legislation. Further, any plan paid into has a value. We cannot accept that a pension could at any point not have a value. Our concern in

Section 14 (3) lies with having the court ascerta in a market value and di vision of that value. Our first object ion is one of princip le. This sec tion through its applic ation cont inu es the separative prope rty concepts in famil y law. lt does not assume that the pension is or has been jointly owned and that both parties can and should have the right to main tain that asset as a pension regardless as to whose name is on the asset. lt does not allow for pension credits. As soon as you deem a dol lar value to the pension and pay one party out, the asset ceases to be a pe nsion. Under this

section in its present form the nonholder, usually a woman, is forced by law to lose the pension totally. lt is necessary to use this legislation to found the principle of com mun ity property and, as an exten sion of that, pension credits. From my read ing of The Pension Act, if this legisla tion, Bill 15 , assigns both parties as owners of the pension, then there's no need to amend or change The Pension Act. We feel that pension credits should be inserted instead of

Section 14 (3) im mediately. If the Comm ittee refuses to accept the aforementi oned concepts, then we see a strong need for guidelin es to be applied; for example, in a pension that is emp loyer and emp loyee contributed, the date of separation cou ld be used and the court could assume that the parties have turned 65 and ascertain the value of the pension at that point. In a plan where there is a one person contributor, a comm uted value could be assigned with a defined benefit pay out used to desig nate a value of the pension and equally div ide it.

In a new not vested pension, the amount of the premiums paid could be ascertained and that fig ure equally di vided. To more easily ascerta in the value of a pen sion and to maintain consis tency in the courts, we would recommend that a court actuary or actuaries be appoi nted if you're going to maintain

Section 14 (3). So our reco mm endations basically are that Sect ion 8.1 (1) be deleted totally, that

Section 14 (3) be deleted, and an appropriately worded secti on, allowing for pen sion credits as the only way to split a pension, be incorporated. Thank you. MR. CHAIRMAN: Are there any questions for Ms Dowbiggin? Mr. Film on. MR. G. FILMON: Thank you , Mr. Chairman. I just wanted to apologize to Ms Dowbiggin for the hum our which we saw here at the beg innin g of her presenta tion. We indeed were not making light of her presenta-

Thursday, 17 June, 1982 lion. Rather, when she made the comment about not having looked into it in depth, researc hed it and there fore not perhaps able to deal with it in det ail. my colleague just simpl y said that her party was known for that in the House as well, so that it was all right; we unde rstood.

In any case, the question that I'd lik e to ask is that earlier in referring to pension benefits, I bel ieve Ms Dowb iggin said a couple could convince the courts by prod ucin g medical evidence that the pension should not be paid out, because they had medical evidence that they would expire before reaching age 65. Is that what you said in your prese ntation? MS L. DOWB IGGIN : it's an extreme example to make a point. MR. G. FILMON: Okay. If I may just ask a question. What sort of medical evidence would you visual ize that anyone could present that would convince a court that they would expire before age 65?

MS L. DOWBIGGIN: That's not the intent of the example . I'm sure we could go on and on and round and round, which is exactly what would happen in a court set ting. MR. G. FILMON: Okay, that's fi ne. Thank you, Mr. Chairman. MR. CHAIRMAN: Are there any further questions? Mr. Manness. MR. C. MANNESS: Yes. I think you made a comment that, in fact, any money put into a pension plan today definitely has value. Are you ind icating that it's a gua ranteed fact that all money invested - and I hate to use that word - today will have value in the future? MS L.

DOW BIGGIN: 11 will sti ll be money; it's some thing that's been paid in. 11 can't come out at a zero value unle ss the whole plan has gone bankrupt. MR. C. MANNESS: Wel l, fi ne. I think the witness has in fact said the qual ifying mark. You said unless it goes bankrupt; so you acknowledge the fact that cir cums tances could arise that it mi ght occur? MS L. DOWBIGGIN: That's why I put the cont ingency in for the dol lar value, as in $1 .00. MR. CHAIRMAN: Any further questions? Seeing none, I'd lik e to thank you, Ms Dow biggin, for your presenta tion. MS L. DOWBIGGIN: Thank you. MR. CHAIRMAN: Mrs. Beth Kroll.

MRS. B. KROLL: I'm present ing this brief on behalf of the Winn ipeg Chap ter of the Congress of Canadian Women and its affili ates, the Women's Branches of the Association of United Ukrain ian Canadians, the Fed eration of Russian Canadians and the United Jewish Peoples Order. The Congress of Canadian Women is part of a 36 world-wide organization, the Women's Int ernational Democratic Federat ion, with 12 1 member organiza tions in 10 6 countries.

The WIDF holds consult ative status B at the United Nations, which covers nongo vernme ntal organizations and as such, particip ates in the work of the United Nations Comm ission on the Status of Women, which has resulted in the Universal Declaration of Hu man Rights, the Declaration of the Rights of the Child and the Declaration on the Elimi nation of Disc rimin ation against Women. lt was upon the suggestion of the WIDF, backed up by other non governmental organizations, that the United Nations decided to decl are 19 75 as Int ernational Women's Year. For over 30 years, our Winnip eg

Chapter has been working for the achie vements of full equality for women. We made a subm ission on famil y law to the Law Amend ments Commit tee in November, 19 76, and we later welcomed the enactment of the family law legislation whic h followed. One of the purpo ses of our organization is to advance the stabili ty and well-being of the famil y, which we consider to be the foundation of society. Famil y law should not only deal with marital break-up, but should buttress the family mi lieu, bolstering the harmony between husband and wife and el im inating ineq ualit ies which create friction and hostility.

This purpose can best be served by provisions for full and im mediate com muni ty of property during marriage. If we concern ourselves only with the di ssolution of the marriage, it becomes a case of locking the door after the horse has been sto len. The nonea rning spouse, in the vast marjority of cases the woman, should not have to wait for marriage breakdown to est ablish her right to a fair share of the property accumu lated during the marriage. Marriage should be a partnership of shared resp onsibil ities. The roles of the econo mic provider and the home maker are of equal value to the relationship.

There fore, marriage can only be strengthened if the non earn ing spouse is not put in the humil iating position, as many are now, of having to ask the earning spouse for money. To remedy this situation would be a posi tive step in creating and maintaining harmony in the home, with the resultant good mental health of all mem bers and less marriage break-ups. We, therefore, strongly urge that Bill 15 include the following amend ments:

(1) To make provision for full and im med iate com mun ity of prope rty reg ime of family assets during marriage and on marriage break-up.

(2) In the event of separation, pensions be shared on an equal basis of 50 percent to the wife and 50 percent to the husband.

(3) The question of dete rming the value of a pension not be left to the courts or the judge, but that a formula to dete rmine such value be spelled out in The Marital Property Act. By so doing, we bel ie ve family law legislation will move in the dir ection of enabling women to achie ve full equality. Thank you. MR. CHAIRMAN: Thank you Mrs. Kroll, are the re any questions? MRS. B. KROLL: I have some copies here if anybody

Thursday, 17 June, 1982 wants them. MR. CHAIRMAN: Could you give them to the Clerk and she will copy them and distribute them? HON. R. PENNER: I' d like to thank Mrs. Kroll for her presenta tion and concern. I just want to make a cou ple of comments. I think it should be understood - I hope it has been from comments I' ve made previously - that this bill is not to be taken as a comm ent, express or impli ed, on the concept for ex ample of com mu nity of property.

There was a particula r problem - it was clearly an urgent one - that had been recognized in fact by the previous admin istration following lsbister and which we were anxious to deal with in what of necessity, of course, has to be a fairly short Session.

The larger question such as communi ty property would really require very very care ful consid eration over a lengthy period of ti me, briefs and so on; so that the bill is designed in the main to deal with a particula r problem in a particular way; nor is the bill a comment at all on the question that was raised earlie r about desirabi lity of pension spli tting legislation.

Indeed, I think genera lly there would be an agreement on that, but it's our advice that to amend The Pension Benefits Act is a horrendous problem and you don't want to do that without very careful thought as to how that can best be effected. So, this is an interim bill in a way, but we do bel ieve it will meet the particular problem for the time being. The only other comme nt I have is that with respect to formula, there are arguments that can be made both ways about putting formula or formulae into legisla tion.

Our advice is that there's such a variety of pen sions that it mi ght be better to do as they di d with some good results in B.C.; namely, sinc e the courts will have to rely case by case on expert evidence, to allow the courts to develop the general approach to be taken in evaluation of pensions on the basis of expert evidence which is available, and we' ll mon itor the situation. Thank you for your presentation. MR. CHAIRMAN: Are there any further questions? Thank you Mrs. Kroll. Ms Valerie Gil roy. Ms Bernice Sisler. MS B. SISLER: Mr.

Chairman, I wonde r if it would be permissible for Jenn ifer Cooper to take my place and for me to fall back to her place si nee she has to leave, if that's permissible for your comm ittee? MR. CHAIRMAN: Certainly. MS B. SISLER: Thank you. MR. CHAIRMAN: Mrs. Jennif er Cooper. MRS. J. COOPER: Good morn ing. I' d like to make a presenta tion on beh alf of the Manit oba Association of Women and the Law.

I, first of all though, have a couple of com ments about thin gs that have come forward and that appear to be particula r concerns of this com mit tee. 37 The first is with respect to this formul a that MARL was recom mending, this idea of having the numb er of years that you have cohabited over the numb er of years you have contri buted times a half. I think that's a little bit mi slead ing to say that formul a is going to work, because the que stion is sti ll half of what. We still have to dete rmine the value.

In fact, it's my opin ion that The Marital Property Act as it pres ently exists provides us with that formula, because if you think about it, that formula after all, all it's doing is allowing you to ascertain the numb er of years during which the spouses cohab ited and made pension contributions, which is unde r our scheme in The Marital Property Act, when we're su pposed to be looking at marital assets in any event. I refer you to

Section 4(1) where it makes the Act apply to assets acqu ired during marriage, so therefore if you made pension contributions before marriage, they wou ldn' t be incl uded at all. Then I would refer you to

Section 15 , which makes the cutoff date basi cally the date of separation; so we don't need a for mula like that, I would subm it. I think that already we're goin g to be looking at the years of cohabitation to dete rmine it. We're still left with the problem , which of course is what is the value of the pension. The other point that I was going to make is with respect to a matter the person from the YWCA brought forward; that is

Section 8.1 (1) of the Act as it's proposed in

Section 4 of the bill, and that is this phrase: "that there is no reasonable possibili ty of the rights ever bei ng realized." The subm ission was that should be de leted entirely. it's our subm ission that it could be a pension has zero value, it coul d be a pension is valued at $10 0 or $1 0,000 or $50,000 and that the re are many many factors to take into account in dete rminin g value; for example, the age of the contributor the health of that indi vidual, how long they've worked at their emplo y ment, their job hi story, maybe they jump from job to job and there's no likeliho od that a pension will ever be vested.

That's a job for the actuarial to consider.

I would subm it, that the cases that have already been handled in the courts when actuarial evidence is brought forward and these actuaries are being cross examined, they give evidence that yes, in fact, they've conside rd that this man is 64 1/2 years of age, has been working at the same place for 35 years and they are assu ming that he will get his pension next year, or they have consid ered that the man is only 20, has only worked at his emp loyment for 2 years and the likeli hood that his pension will vest, that he will work at that same place for 10 years, is somewhat unli kely. lt could be that it's so unlik ely that in fact the pension has zero value.

My feelin g is that if the judges unde rstand that if this Act is explicit enough with respect to those kinds of factors, then there's no need to have a provision like this. I would submit that it's dangerous to have a pro vision lik e thi s because I think it invit es judges to hang their hat on this kind of reasoning by saying, well, there's no reasonable possi bility. All of those factors must be cons idered each and every time the judge is in a position to try and assign a value. The last thing I' d just like to speak to is Abe Clear water's submis sion.

He was pointing out the inequity of having to pay money over where there may be no

Thursday, 17 June, 1982 other assets. This, of course, is an issue no matter how you value the pension; it's always going to be an issue. The first thing I would say about it is, I think it's not going to be that often that there aren't some other assets that can be transferred about to make it so that the spouse's pos ition is equitable. For example, the famil y home would be a lik ely candidate or its contents or bank accounts and so on. In the event, that there aren't any assets to be transferred, it could be that the ind ividual has a sufficient income that certa in amounts could be ordered to be paid. As Mr.

Penner has poi nted out, there's certainly a provision in the re that would allow it to be paid over tim e with or without interest, so as to avoid undue hardsh ip. The issue, I think though that really bothers Mr. Cle arwater is the fact that this poor fellow could die at age 64 and never get a pe nsion, but there he is at 35 years of age, he's di vorcing his wife and she wants some of that value. The submis sion that I wou ld make too, is to conside r that in determ inin g the value, those risk factors are being built in by the actuaries.

They're saying, okay, the man is 35, when is that pension goin g to vest and they look at all thos e kinds of fac tors. Now, if he gets lucky and keeps working at the same place and lives till 65, he gets a windfall. If he gets unlucky and di es earlier, perhaps you could look at it as her gettin g a windfall, but the point being is that those factors are built into it. So it's not resultin g in a fundamental unfairness to the contrib utor as Mr. Clearwater would suggest.

I would just like to then refer to my submission which, I would comment firstly, applauds this bill and its intent and in particular, its categorization of pen sions as family assets which we think they should rightfully be characterized as. Agai n, our issue that we're concerned with is the same one that concerns MA RL, the YWCA and a numb er of other people who've made submis sions.

Our concern is that there's absolutely open-ended dis cretion for the judges and no gu idel ines in trying to dete rmine how we're going to value the pensions. it's all very well and good to say, you get 50-50, but 50-50 of what? lt could be very little or it could be qu ite a bit. Bill 15 , our concerns are twofold; first, that there will be a lack of certa inty in making settlement. As a law yer, I'm speaking particu larly on behalf of my clients, there's going to be a lack of certainty that won't allow us to make set tlement without recourse to the judicial system .

Secondly, we're concerned that deter mi na tions of value of a pe nsion mi ght be clouded by a judge's opinion regard ing perhaps the appropriate ness of the Act or his view of the particular eq ui ties in the case, always the inarticu late major premise that sometimes seems to exist. With respect to the question of certainty. I would comment that, generally, The Marital Property Act with its 50-50 sharing regime is very easy for the pub lic to apply and to und ersta nd.

Very often people come into the office, they've already listed their assets and they have proposals as to how they're going to deal with it 50-50. I guess the Act got a lot of publi city because it seems to be working wel l.

If there's an issue as to valuation, usually a mutually approved apprais er can be appoi nted, go in, take a look at the fami ly home and give an idea as to value. 38 Our subm ission is that this legislation whic h deals with the valuation of a marital asset, wh ich practically everybody's going to have to consid er, most people have some kin d of pension or othe r, sometimes many dif fere nt ki nds, is goin g to introduce a big question mark. How do we advise a client as to the appropri ate amount of which to settle?

There's going to be wide dif ferences in valuation, depen di ng on the approach that the court is going to use. We have no idea which approach the court will use. Court costs and lawyer's fees, of course, eat into the amount of the marital assets which for the average famil y is not all that large to beg in with. I would submit that tim e is not necessar ily going to hea l th is, antic ipatin g Mr. Penner's comme nts, because when I look at the B.

C. situation I vJill admi t that I haven't read all the cases, but I've certainly read a report which has come out rather recently prepared by two lawyers in B.C., Lyndon Robinson and Terry Webster, which ind icates that the case - there are many dif ferent opin ions and views being taken. They spend much of the report look ing at the recent case of Ruthe rford versus Rutherford which they mildly call a landmark de ci sion. lt introduces all kinds of thin gs it's B.C. Court of Appeal - many of which I think are very qu est ionable , I wouldn't want to see im plemen ted in Man itoba.

More about that case later, but I think the main point is that without some di rection or guid ance it's goin g to be increas ingly di fficult for the lawyers to guide people through a happy settlement - if that can be happy - at marriage breakdown of their assets without having recourse to the courts. it's with all du e respect to the jud icia ry that we articulate this second concern. Many judges, of course, make every effort to apply the existing law fairly and eq ui tably; however, judges are hum an.

They are a product of their environment and we can certai nly look to some past cases to see that the courts have not always come out in favour of women. That's probably why there are so many women's groups here that are very very concerned. We are saying that where di scre tion ex ists, these factors, even though they may be as I say an inarticula te major prem ises, may influe nce the judge in the exercise of his di scretion. Anothe r reason why women's groups were saying don't give di scretion to vary 50-50 is the same reason why we're saying don't give nothin g but di scret ion in valuing assets.

For example, in the George versus George case, which is an unreported County Court de cis ion in Man itoba, the courts looked at the cash surrender value of a pension, less the tax repercus sions. Some courts have not taken into account tax repe rcussions. Ask yourselves whether it's equitable to take into account tax reperc ussions of a pension when it's unlik ely that the individual is going to cash that pension out at their current income, rather they're going to probably wait until their income is somewhat less.

The poin t is that valuation of property cannot be influenc ed by any extraneous factor such as whethe r a judge after hearing the facts of the case in some way wants to pun ish the wife, for example, for her adu ltery, whether he consi ders that her contri bution as a homemaker com pared with his 14 -hour days at his employment is somewhat less and he wants to equal-

Thursday, 17 June, 1982 ize that, the point is he's given unlim ited option in terms of the method which he's going to use to value with qui te dif ferent results. it may be that this mi nd-set results in a somewhat lesser valuation and again, it's fine to say 50-50, but what if it's 50 percent less than of what you shou ld be gett ing? Okay, wel l, the que stion that everyone worries about and is concerned about, how do we det erm ine value then?

Our subm ission is we shou ld not look simply at the cash su rrender value or the amount of the emp loyee contributions and that's been done in the past, but rather we should look at what's been called the actual value of the pension. I refer you to this Ruther ford case out of B.C. and I'm quoting the judge now. "Ordering the husband to pay one-half the pension contributions to date," which is what we're not recomm ending as a settlement of the wife's claim is clearly unfair to her. The value of the pension, once it comes into the possess ion of the husband is worth many times that sum.

Why should the wife not share in its actual value? Why not indeed? Now, the two major arguments that are used against determ inin g actual value, the fi rst one is that it's tough to figure out; the second one is that, well, we cou ld have this inequ ity that a person is being asked to pay someth ing they don't yet have. With respect to the first concern, surely, it's no response to say that because it's hard to figure out actual value that we shou ldn't try. If you use a formula of actual cash value, then what you end up gett ing is consistently underv aluing pensions and is that equitable, having that result?

So I think that we're forced to look at what the actual value is. We'd like to be able to give you a very simp le formula, but heaven knows, pensions are compl icated and I'm no ex pert, but one of the suggestions we have is something simil ar to The Fam ily Maint enance Act whic h lists factors whic h the judge mu st consider in determ inin g in that case under

Section 6, I believe, amount of spousal mai ntenance that should be paid. In this case the kind of list that we wou ld have would include factors such as the length of the marriage the age and the health of the contributor, the amou nt of contributions which have been contrib uted to date by the emp loyee and the emplo yer and whether that pen si on is vested. Now I don't suppose that list is exhaus tive but I su ppose with further research it could be made to be exhaustive.

I'm recommending that it be made a closed list because I think there are other factors which the courts have consi dered which I don't think are rele vant to det er minin g valuation. For examp le, I don't think that the cash su rrender value of the pension is at all relevant and perhaps it's so imp ortant because the judges have used it so often, it may be so im portant to actually put it in the legisla tion they'r e not to look at it. Because it's so easy for those judges to say the cash surrender value if you walk down tomo rrow and cash it in is $2,000, okay, she gets $1 ,000.00.

That has nothing to do with the actual value of that pension right now which projected over the long term can be worth far, far more. You always find that the cash su rrender value is much lower than the actual value. Simi larly the age of the recip ient, typically the wife, shouldn' t have anything to do with what that value of that pension is and it's been looked at or, for example, whether the wife has her own pension. What has that 39 got to do with it except maybe that's got to be sha red as we ll?

Also, whether mai ntenance is payable and sometimes in situations they have said, we ll, the wife is going to get $500 a month mai ntenance, so we should n't share this. This pension is an asset, is a piece of marital property which must be shared. The Fam ily Maint enance Act tells us that after all marital property has been shared, then we 'll look at the qu estion of mai ntenance, whether it's needed. it might not be needed, now that she's got the house, furnit ure and thin gs like that she may not need main tenance, she's got her own part-ti me job.

Simi larly under The Divorce Act, althoug h it's not said explic itly, the case law is developed that you look at the di vision of marital property, you let that happen and then you say, okay, now is mai ntenance necessar y? But we've had cases which are quit e backwards to that, I thi nk, where the judges are getting all mix ed up about pensions because the man will be 65, he'll be on a pension and she's sharing it then by way of maint e nance and so on, shouldn' t have anything to do with it, we're sugges ting.

That second problem that there's going to be no assets to satisfy the order, I' ve already dealt with. I think that we have remed ial provisions in the legisla tion in the case where it's very unu sual. There's one other solution and that's the Ruther ford case that brought it forward. This would be, in my view, a situa tion where you had no other assets to transfer over and the indi vidual had no income sufficient that you cou ld satisfact orily order a payment over.

In that situation what Ruther ford did and I sugge st our cou rts could certainly do it, is they ordered that the husband or they dec lared that the husband was a trustee of the wife's portion, so that she got her money out when he did. Now, I make a word of caution here because I think that there are problems with that approach and that it should be used in a last resort. For one thing and this has been pointed out already, it obl iges parties to keep in touch when they probably don't want to. Also enforcement is going to be a major problem.

I think it's all too often that ind ividuals who don't have any assets and don't have a sign ificant income are also people who are without roots. They move around a lot and maybe you aren't going to be able to keep track of that indi vidu al - to realize that - when you want to 20 years down the line. Although the judge in the Ruther ford decision said, well, the wife can obtain an order of security securing it against property or whatever, by de fin ition ther e wouldn't be any security.

If ther e was property or some thing else, you wou ld presumably have used that to satisfy the oblig ation at fi rst instance. The ideal situation, and I agree with all of the pre vious speakers, wou ld be a reform of The Pension Benefits Act which would eradicate all of the prob lems. We wouldn't have to worry about valuing these darn pensi ons, but the fact is, I agree with Mr. Penner , that it really should be done in the context of a global change to that Act and in the interim, best that we fix up lsb ister so that women are being able to share in the value.

In terms of what that value shou ld be, I thi nk the courts should be dir ected to look at the actual value of the pension. MR. CHAIRMAN: Mr. Penner.

Thursday, 17 June, 1982 HON. R. PENNER: Let me thank Mrs. Coo per for an excellent presentat ion which, in part, I think because it is we ll thought out, illus trates the comple xity of the problem. I would agree and have so stated that a better, not necessar ily an ideal so lution because I don't think there are ideal solutions, but a better solu tion will ultima tely be found I hope in the revamping of The Pension Benefits Act. I just wanted to comment that I've read Ruthe rford and Ruthe rford, in fact, I have it with me. it's interest ing that there's a commen tary that Mrs.

Coo per referred to on it extollin g the virtues of the decision, but then you went on to add edito rially that you don't agree with the comme ntary which ind icates the fact that we had to wrestle with. At the moment, the re is no clear consensus as to what to do with the pension and how to value.

In fact in Rutherford, referring to a California decision or an earlier B.C. decision, the judge at one point said, "In this case the pension is more comp lex than in Pryclak, which is the California case, and that rather straight forward formula cannot be adopted ." I think I'm quo t ing that to illustrate the difficulty of attempting to put a formula for valuing when there are just so many dif ferent kinds of pensions and there are other conti ng ent interests which are dealt with here, life insurance policie s, accident and sickness insu rance policies, to attempt to write into legislation a singu lar formula is enormously dif ficult.

I think that while I unde rstand the concern that many people have, not just women's groups about judicial disc retion, the judicial di scre tion by definition must be appl ied judicially and that is on the basis of evidence that by the very nature of the beast, the particular asset bei ng dealt with, the re will have experts brought in who can give evidence on the particular pension or contingent interest that is in question. I would hope that the courts will in such instances, where the parties haven't agreed previously, come to a reasonable conc lusion. Perhaps I should leave it on that reasonable note.

Thi s legislation, lik e all othe r legislation, will be monit ored very carefully. If in fact the kin ds of fears that have been expressed that judge s somehow or other won't be able to rely on expert evidence but will require formulae to be built into legislation, well, we' ll have a look at that situation as it develops. MRS. J. COOPER: I agree with Mr. Penner that there is no cle ar consensus as to formula.

There certainly is none in the B.C. legislation as it's grown up and its certainly mi slead ing to imag ine that the experience in B.C. should hearten us in leavi ng all of the di scretion with the judge s to do with what they will. I don't think it's enough to say that we will have a watchdog posi tion.

I think we should always do that, that's a given , but one of the reasons why in the family law legislation we felt it necessary to have a list of factors for spousal mai ntenance is because the his tory was the judges were taking into account all kinds of factors which were not relevant and not the least of which was fault, the fault of the marriage break-up.

We want to avoid a situation lik e that in this case. l think the very least that can be said is that it's unfair to divide the actual cash value; it's unfair to divide the sum of the emp loyee contributions to date; it's probably unfair to take into account the tax reperc ussions gi ven that people don't genera lly take their pension benefits out in a hi gh 40 income earning year, they wait until they're retired or laid off or some thing. There are certa in th ings that can be said which the judges have done, so quite frankly, I don't trust them not to do it again. HON. R.

PENNER: I mi ght conclude with a self serving state ment. Apparently the difficulty with those judges is they took neithe r my evidence lectures or your evidence workshops. MR. CHAIRMAN: Mr. Filmon. MR. G. FILMON: Thank you, Mr. Chairman. I too would like to thank Mrs. Cooper for her present ation, a very broad coverage of the problem. ! think because it requir ed this sort of broad coverage, it illustrates how comp lex it is. I'm going to get to the nub of the issue which is to deal with trying to dete rmine how the pension benefit shall be equitably divided.

I think that we're all coming from the same viewpoint, that is, that equal sharing of all of the applicable marital assets ought to be our objective. Ho wever, pensions, I th ink we've had ample illustration, are the one asset that cannot if they are not ones that can be pre-e ncashed cannot be valued eq ually. Mrs. Cooper has referred over and over again to saying that she's not in favour of utilizing cash value; she's not in favour of the sum of contributions to date; she wants to value them based on the actual value and I submi t that there is no such thing.

You eithe r have the present value or you have the future value with risk and there's nothing in between. The fact of the matter is she has pointed out that actuarial analysis accounts for a risk factor; then you have said that the refore you are in an equal position with respect to windf all if you make evaluation today. The equal position is that if the spouse who had the pension or retains the pension benefits di es at 64 v, , the windfall is to the spouse who got the money at the time of marriage break-up.

On the other hand, if he lives and he gets the wind fall, the fact of the matter is that's not true; if he lives, he only gets to get his equal share of whatever was divided some years ago at the marriage break-u p. She has already received it, she has no risk if we're talkin g husband and wife - I'm sorry, I shouldn' t do that because it could equa lly be the other way around and I want to make that point.

But the fact of the matter is that once you give somebody their cash share up front they have no further risk. it's the other person who bears all the risk, so the only fair way is to find a method of dividing it in which the risk is shared and that only way is to have it vested at that point in time in both persons' hands and they each have the risk for their own half but they don't bear the risk for the other person's half. That, as Mr.

Clearwater said, is able to be done with changes to the pension legislation. lt would be able to be done and it would be able to be valuated but there is no such thing as actual value. That's my submi ssion and I'll ask for Mrs. Cooper's comm ents on it. MR. CHAIRMAN: Mrs. Cooper. MRS. J. COOPER: I agree with what you said that changes to The Pensions Benefits Act are our ultima te

Thursday, 17 June, 1982 ;�oal not only because it wou ld make this problem a heck of a lot easier, but also because there's a very real ;o cial problem of elderly women in poverty and we have to provide for that in some way.

With respect to vour comment that the wife is not at risk, my subm is ;io n unde rstood that in the event that the hu sband is really very young and there is some issue as to whether he will live long enough or work at his place of employment long enough to get those benefits, then when the actuaries take that into account, they will in ;ome cases seriously unde rvalue the pension in order to build in that risk factor.

So in other words even though the wife walks away with $2,0 00 cash, as you put it, no strings attached, no risk; if she'd hung on, his value at age 65 mi ght be $60,000, for example, and half of that is $30,000.00. But she suf fers a little and if he dies before that, he probably suffers a lot except he's not around to know it. I di sagree with you that there is no actual value. I use that phrase only because the courts have brought forward that phrase and it can be di stinguished from cash value or other phrases.

The actual value caus es you to look at really what that pension is worth and what it's goin g to be worth down the line. With respect to a formula for determ in ing it, which I think is the issue that's before the comm ittee, di fferent people have put forward dif ferent proposals. I'm ask ing you to consider listing some factors the judge must look at and I think even that will help and, in particular, per haps listing things he ought not to look at, in particu lar, if that list is not an exhaustive one.

The Family Law Su bsection of the Manit oba Bar, of which I'm a member, will be presenting I suppose tonight - now that we're at noon - and they also have a subm ission as to a way in which one can dete rmin e value. it's simi lar to one that was brought forward early this morning; that is, you ask yourself the ques tion what would it cost now to buy something which would have the resu lt of the same benefit 20 years down the line and that's an alternative.

The point is, if you don't have it there, you're going to wind up with no certainty in the law and pos sibly great inequ ities, espec ially if the judges are simply halting the cash value. MR. G. FILMON: Of course the re are all sorts of uncertainty about the future and that is exactly the problem. You can't have any certainty in the law about the value of this pension, that's prec isely the point. There is even the uncertainty as to whether or not ulti mately the benefits might flow because of what ever happens in the economy at all, but that's anothe r case and another problem. Mrs.

Cooper has ind icated that actuaries will take into account the risk based on the indi vidual person, his health or how long he's lik ely to stay. That's not an actuarial analysis at all, that's somebody's crystal ball gazing and guess. Actuaries only make their analyses based on all of the accu mulation of experience to date, on the milli ons of people and the project ions of expected life, all of those things, how many ti mes they may change jobs and so on.

They are basing it on the broad spectrum of the mil lions of people who are under coverage for pensions throughout North America or the world, in general , and obviously their statistics are dif ferent for dif ferent areas because we seem to have hig her risk 41 areas of living. The fact of the matter is it is imp ossible for an actuary to do it on an individual case. MR. CHAIRMAN: Mr. Evans on a point of order. HON. L. EVANS: Mr.

Chairman, on a point of order, while the information is interest ing, the debate going on between the delegate and the memb er is int ense and interest ing as wel l, I bel ieve our procedure and practice in the past is for dele gates to present their views and for the mem bers of this com mit tee to ask qu est ions. The odd tim e we do preface our questions with com ments in order to elaborate on the question, but it seems to me that there's a debate goin g on between the deleg ate and the member of the com mit tee. I don't think that's in order. MR. CHAIRMAN: Do you have an explicit question, Mr. Fil mon? MR.

G. FILMON: Mr. Chairman, I apologize and obviously that's part of the debate that should ensue after we've received the presen tations. No further questions. MR. CHAIRMAN: Mr. Manness. MR. C. MANNESS: Thank you, Mr. Chairman. I just want to rei terate one comment made by my colleague and I guess it struck me when the delegate indi cated that there is no certainty in the law and again I'm going to ask if that isn't the reason why we're having so much di fficulty, or you're having so mu ch di fficu lty, in attempting to arrive at a formula.

The fact that, as I understand it, we can define present value and we can define future value, but we can hardly define future value without recognizing that there is risk. Are you saying that there is a position in between because I submit there isn't? MR. CHAIRMAN: Mrs. Cooper. MRS. J. COOPER: The issue of certainty, I think, it's being mis contrued.

The comment that I made that the re was not certa inty or that there would be no certainty if this bill was introduced is that, as a lawyer, someone comes into your office and they have a bun ch of pensions maybe or at least one and you're trying to sort out their marital property and di vide it 50-50 between the spouses and you can't. You have no idea how to advise them as to what that pension is worth.

All you can say to them is, "Well, the judge can do what he will." Now if you have a list of factors to look at, you can, for exam ple, the two of you, you and the lawyer on the other side, go and appoint a mutually approved actu ary, have that actuary come up with a figure, because that actuary is guided by the factors which the Legis lature has said are im portant. Of course, we do that with respect to evaluation of homes all the time.

So the certainty issue is with respect to whether or not we're going to have to end up in court spe nding cl ient's money, most of the time there's not all that mu ch of it and it's very expensive to go to court. MR. CHAIRMAN: Mr. Manness.

Thursday, 17 June, 1982 MR. C. MANNESS: I'm wondering, rather than calling in actuaries, if it wouldn't be more imp ortant to call in the in vestment people managing a portfo lio of investments to dete rmine their state, the present eco nom ic state, of where that pension money has been invested and making a value judgment as to their degree of certainty at that particular time. Would n't that be of greater value than calling in actuaries unde r your position? MR. CHAIRMAN: Mrs. Cooper. MRS. J.

COOPER: Not being an actuary myself, I am unde r the und erstanding that one of the things actuar ies do consider, and they consider a multitude of fac tors, is where the money has been invested, the inter est rate that you're recei ving on that investment you'll likely receive, what inflation is going to be over the next few years. Actuaries are very broadly educ ated in those areas from what I und erstand and I defer to them. MR. CHAIRMAN: Mr. Santos. MR. C. SANTOS: Thank you, Mr. Chairman. Cer tainly there is certainty in life.

Everybody is certain to di e and everybody is certain to pay taxes, but except for those two thi ngs, probably there is uncertainty in life and the refore life tends to be very comp lex. Because of this com plexity, I want to ask Mrs. Coo per if it is wise to deprive judges of hum an judgment and dis cretion? MR. CHAIRMAN: Mrs. Cooper. MRS. J. COOPER: Yes. That's one of the reasons why we certainly deprive them of it in terms of varying the 50-50 sharing, because their wise dis cretion has cer tainly worked to the dis advantage of women over his tory. MR. C.

SANTOS: The fact that some judges had con si dered factors which you think are irrelevant is of course sub ject to the remedy of appeal, is it not? MRS. J. COOPER: Not when the appeal judges think those factors are sensible. Our only remedy is to per suade the Legisla ture that the legislation should di rect them to conside r or not consider certain fac tors, then their hands are tied. MR. C.

SANTOS: I think what we need is not abolition of hum an dis cretion in judgment, but what we need is some criteria so that judicial dis cretion may not be exercised arbitrarily. it is the arbitrariness that is the danger, not the very presence of hu man di scret ion, otherwise we mi ght as we ll consign ourse lves to being ruled by com puters if everything is by formula. MRS. J. COOPER: I suppose that's exactly what I'm suggesting when I suggest a list of factors.

I wish I cou ld give you a mathematical formu la, but I agree with all of the opini ons that have been exp ressed so far, that there isn' t one that will apply and give us a magical comp uter- like solution. That's why I suggest the list of factors the judges can look at. When we 42 think they're going to look at irrelevant factors, we can di rect them not to. MR. CHAIRMAN: Are there any other questions for Mrs. Cooper? Seeing none, I' d like to thank you for your prese ntation. MRS. J. COOPER: Thank you. MR. CHAIRMAN: Mrs. Carlene Murphy. Carlene Murphy. Ms Bern ice Sisler. MS B. SISLER: Thank you, Mr. Chairman.

My com ments will be very brief. I first want to complim ent the government for bringing in a bill which clearly defines pensions as a fa mily asset. I think that ougr,t to have been done in the Fami ly Law Debate in 19 78 and many of us were very dis appoint ed that it was not consi dered a family asset.

I think it's apparent from the comments made here this morning that most people are willin g to accept that, apart from the family home, for most couples, a pension is the asset that fa mili es share; that the woman in the home and the chi ldren, of course, give up eq ually with the man so that the pension can be paid for. I think that the re is a great need for new percept ions on the part of emplo yers about their mar ried emplo yees. While I say that most people would accept the fact that pensions are a family asset, I think that will be accepted in a kind of academ ic argum ent,

whereas the perception of married emp loyees having to share the pension at home is not a perception emplo yers have nor one I would say that the pension ind ustry has. I think it's a logical extension of our Family Law Reform. I would remind you that the time of a fa mil y law struggle, as we refer to it, the principles we fought for were consi dered very radical at that time. They are now incorporated in one way or another into The Marital Property Act.

The principle that marriage is a partnership of legal equals and should be a social and ec onomic partnersh ip as wel l, that work done in the home is of equal value to work done outside the home, as I say, are princi ples now incorpo rated into our law. I think there needs to be the reco gnition of the new principle that pensions belong to both. I wou ld point out that I have a great deal of concern about the two areas that other speakers have listed, 8.1 (1) and 14( 3). it's mv feelin g, though I am not a lawyer, that those two sect ions just take us back almost where we were.

I have conferred with legal advice in British Colum bia with someone who prac tises family law out the re and certainly it was the opin ion of that legal advice that those sections are large loopholes. That perso n, of course, practises und er law, a law that defines pensions as a family asset but has no guidelin es as we have been told.

I think one of the dif ficult ies in this bill is that it attempts to do all things for all people and, as I listen to the comments, it seems to me that we might figure some thing out for pensions, but then it doesn't hold for life insu rance or accidents and sickn ess insu rance or whatever, that the re seems to be problems with the blanket category. Perhaps more astute minds than min e will be able to figure out a way to solve that.

Thursday, 17 June, 1982 I think another thin g that hasn't been looked at is the kinds of pensions plans and particular categories. I would sugge st that in a broad pictur e there are mo ney-purchase plans and to find benefit plans. Then under each of those you have the situation where they are not vested and where they are vested.

I think that if we look at the money-purcha se plan, for example, it is qu ite possible that amount can be deter mi ned and that half of the empl oyee contribution where it is not vested, because of course if it's not vested you don't have access to the empl oyer contribution, that it can be determined relatively easily. I mu st say that I subscribe to the suggestion, the theory, or I would hope it would eventually be prac tised, that pension credits should be given in lieu of an amount of money; that pension credits at pensionable age is obviously, to my mind, the way to solve this. I, like Mr.

Clearwater, bel ieve that we have the technol ogy to do this. I think a lot of our problem arises from the fact that we're not im aginative enough and that we're held back by concepts that belong to another era. I think we should be bold, think ahead and think just because it's diffi cult doesn't mean we can't do it. You know, we can manage to get to the moon and so on, I think we can manage some of these other thin gs. lt's only because we don't think im aginatively enough that we're held back by that.

In a situation where a mone y-purch ase plan has been vested, half of the comm uted value, which was explain ed to you in detail by the fi rst speaker, cou ld be ascertained very easily. My option wou ld be that would be put into a pension credit to be given out at pensionable age. lt's very apparent that one of the major problems for older women is that they are poor. In fact, the Canadian Advisor y Council on the Status of Women has poi nted out, as others have, that the best guarantee to be poor in this country is for a woman to live to be 65 and over.

So I think that the pension credit situation is a mu ch better situation where the woman would have a pension. In the define d-benefit category, you would have the situation of an emplo yee leaving the plan or staying with it, in which case it would be vested. I think the same situations hold there that you coul d determ ine half the emplo yee contri bution and in the case of when it's vested, you could dete rmine half the com puted value. As has been point ed out, this is already done, where a term inated emplo yer transfers the comm uted value to a locked-in RASP.

Agai n, that's a thing we can put that value into a pens ion credit for women to have it down the road apiece. I would say that I wou ld agree with some of the former speakers who have said that 8.1 (1) is an invita tion to lawyers to argue for a zero value of the pension. I wou ld hope that we would soon see reform to The Pension Benefits Act.

I, myself, while I have a great deal of concern for women, primarily who are in the situation now because of lsbis ter versus lsbister, of not getting anything from the pensions at marital breakdown, my own opinion is that this would have been more manageable had the pension reform come first and this after. I say that with reluctance. I don't want to be mi sun derstood as being anti-woman; I think it's probably qu ite clear that I'm not. Thank you very much. 43 MR. CHAIRMAN: Thank you. Are ther e any que s tions? Seeing none, I wou ld like to thank you for your brief. Mr. Mu rray Smi th. Mu rray Smi th.

Ms Cheryl Hall. Cheryl Hall. Mr. Penner. HON. R. PENNER: May I propose if we're through with the presentat ions on Bill No. 15 and I'm not sure we are, but if we are, I wou ld propose comm ittee rise. MR. CHAIRMAN: Mr. Film on. MR. G. FILMON: Mr. Fraser is here and he sat all morning for the next bill, so I wonder if we could ... HON. R. PENNER: Okay, Mr. Green indica ted he'd have to go and he'd want to be heard this even ing but that's sti ll possible. MR. G. FILMON: He can be heard thi s even ing, but Mr. Fraser's been here all morning and I think he has a comm itment this even ing. HON. R. PENNER: Sur e.

BILL NO. 22 -T HE MANITOBA LOTTERIES FOUNDATION ACT MR. CHAIRMAN: Mr. Fraser. MR. G. FRASER: Thank you very much, Mr. Chair man. My name is George Fraser and I'm not here as a private citizen, as was listed, I'm here as the Executive Director of the Manit oba Sports Federation at which I had register ed myself. I'll try to make my comments as brief as I can because we didn' t intend to be too lengthy in our di scussion of Bill 22, jus t a brief

preamble. The Mani toba Sports Federation currently is com pleting or in the process of completing a formal agreement with the Provincial Government that would end in March of 19 85 in which we are partners in another corporation which some of you may be familiar with, Western Lottery -Mani toba Distri butors In c. The other partners in that grouping are the United Way, the Man itoba Arts Counc il and total commun ity involvement. We each share equally in the proceeds from that partner ship which is an exclus ive distributorship arrange ment for the distribution of lottery products in the Province of Manitoba. We are cu rrent sharers of approximately $1 mi llion

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Collection	Manitoba — Debates (Hansard)
Citation	32-1-la3
Type	hansard
Volume / chapter	32nd 1st hansardpdf la3.pdf
Language	en
Format	pdf
Source	PROVINCIAL
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