Spousal Support and Retirement
Recently, the BC Supreme Court came out with a case that deals with the question of the impact of retirement on spousal support and clarifying what is considered early retirement.
In McPherson v. McPherson 2019 BCSC 933, Mr. McPherson was 60 years old and had been working as a building inspector for various municipalities since 1991. He and Mrs. McPherson were married just under 20 years before separating. At the time they met Mrs. McPherson had a child from a previous relationship that the parties raised and they also had a son together. At the time of the court hearing, both children were adults and financially independent.
Their marriage was described by the Judge as a fairly traditional marriage where Mr. McPherson worked outside of the home and earned most of the income and Mrs. McPherson was the primary caregiver for the children and worked from time to time in lower paying employment. She was 46 years old when the marriage broke down. During their marriage Mrs. McPherson had worked as a hairdresser and held down other jobs from time to time Mr. McPherson at the time of separation was earning approximately $56,000 per year for a municipality as a building inspector. Post-separation Mr. McPherson’s income increased to approximately $112,000 a year, at which point in time he retired at age 60.
Mr. McPherson had been paying spousal support since the parties separated in 2004 and he sought to terminate spousal support on the basis that he felt he had fulfilled his obligation of support to his former wife as he had been paying spousal support for 15 years and his retirement meant they would both be receiving his pension from employment (she was entitled to and received a portion of his pension). His position at the hearing was that the amount Mrs. McPherson would receive from his pension once he retired would more than compensate for the termination of spousal support.
The Judge commented that retirement at 60 years of age was voluntary and early retirement. Mr. McPherson did not have compelling health issues necessitating a retirement, nor was there any corporate restructuring or lay off from his employer. The explanation for the timing of the retirement was simply for lifestyle reasons and that Mr. McPherson wished to spend more time on his leisure pursuits.
The Court found that his voluntary retirement was therefore not a basis for terminating spousal support and that the fact that Mrs. McPherson was now receiving her portion of his pension was not relevant as the pension division was part of the property division and not a replacement for spousal support.
Mrs. McPherson did by consent agree to some reduction of spousal support and the Judge ordered that the monthly payments would terminate on the first month following Mr. McPherson’s 65th birthday.
There are a number of cases which have confirmed the same principles around early retirement and it is well established in the law now that if you have had a lengthy marriage and have a spousal support obligation after separation, do not assume that you can voluntarily retire and that that spousal support will automatically be terminated or reduced.
Decisions around retirement in particular when you are paying spousal support need to be made very carefully and take into consideration the case law surrounding compensatory spousal support.