DEPARTMENT OF LABOUR AND IMMIGRATION
PENSION COMMISSION UPDATE NO. 5

This update has no legal authority.  The Pension Benefits Act of Manitoba and The Pension Benefits Regulation, 188/87 R amended should be used to determine specific requirements.

Revised August 2004

Huppe vs. Huppe Section No. FD 89-01-1888661

Reference:  The Pension Benefits Act Section 31(2) - (4), 31(6), 31(8)

OPTING-OUT CLAUSE RULED INVALID BY JUDGE

In the case of Huppe vs. Huppe, Justice Mercier confirmed that attempts by separating parties and their legal counsel to opt-out of credit splitting provisions of The Pension Benefits Act are invalid.

Justice Mercier summarized the case as follows:

"The husband and wife, after 11 years of marriage, entered into a separation agreement whereby the wife agreed not to make any claim against the husband's pension in return for which the husband would pay her maintenance for three years in order to complete her university education. The husband ceased making maintenance payments after 11 months and the wife thereafter made a claim against his pension. The wife claims she is entitled to maintenance as well as her share of the husband's pension."

Paragraph 7 of the Huppes' separation agreement specified that each party agreed to retain their own rights to their own pension benefits. Furthermore, paragraph 8 of the agreement stated that any payments made from the pension benefit credits of Mr. Huppe to Mrs. Huppe would be repaid.

Mr. Justice Mercier ruled these sections of the agreement to be invalid stating "the wording of the applicable legislation and regulations are so clear... that they cannot be avoided by an agreement which divides assets between the spouses.  Justice Mercier ruled that consequently Mrs. Huppe would be entitled to her portion of Mr. Huppe's pension benefit credit and would not be forced to repay him as per paragraph 8 of their separation agreement.

Plan sponsors are reminded to ensure that, in the case of the breakup of the marriage or common-law relationship, the pension benefit credits are to be divided in accordance with section 31(2) of The Pension Benefits Act, notwithstanding alternative arrangements set out in a separation agreement or court order. The only exception permissible is set out in section 31(6) which allows the parties to opt out of mandatory credit splitting where both spouses or common-law partners have:

1.  received independent legal advice and;
   

2.  received specific financial information about the pension benefits from the plan administrator, and have entered into the written agreement required by the legislation entitled the Pension Benefits Spousal/Common-law Partners Agreement.