Alberta Court of Appeal upholds 'going concern' pension valuation in divorce case, rejecting higher actuarial estimate
August 08, 2024
The Alberta Court of Appeal has upheld a trial judge’s decision to accept the pension plan administrator’s “going concern” valuation of a member’s target benefit pension in a marriage breakdown case, even though an independent actuarial opinion could have given the pension a higher value.
The husband, who separated from his wife in 2018 after 20 years of marriage, has yet to collect any benefits from his vested multi-employer target benefit pension. Both parties agreed the pension accrued during the joint accrual period should be divided equally but disagreed on the method of its valuation for the purposes of family property division under Alberta’s Family Property Act.
The pension plan obtained permission from the Superintendent of Pensions to calculate commuted values on a going concern basis. The plan administrator calculated the commuted value of the pension at approximately $320,000, which would generate a $160,000 payment to the wife. The husband preferred the valuation be completed on this basis.
The wife favoured the standard pension valuation used by the Canadian Institute of Actuaries, which employed a more conservative discount rate. The wife’s independent actuary employed this more conservative discount rate and valued the pension at approximately $435,000, which would have generated a $217,000 payment to the wife of which the plan administrator would only pay out $160,000, leaving a shortfall of $57,000 that would have required a “top-up” by way of an equalization payment from the husband to the wife.
The trial judge sided with the husband, concluding that the pension’s division at source using the plan administrator’s calculated value would result in a “just and equitable” distribution of the pension.
Noting the discretion judges are given on matters of family property division and the predictive nature of any pension valuation, a unanimous three-judge panel dismissed the wife’s appeal, finding no reviewable error in the lower court decision:
“While there may be options as to how to calculate such a value, the choice is a task assigned to the trial judge,” they wrote.
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