Spousal support payors in Ontario may assume that their obligation to pay support will terminate upon retirement, considering each party will have already equalized their assets, including the payor’s pension. Moreover, pension income is often considerably less than employment income, thereby reducing the payor’s ability to make payments.
While there is some truth to the above, payors ought to be cautious when deciding to retire, specifically when doing so before attaining the age of 65.
Early Retirement
Ontario law allows a support payor to change the support payments when he or she can demonstrate a “material change in circumstances”. Early retirement may fall under this category only in limited circumstances. Early retirement is generally seen as a “choice”, and will be accepted as more reasonable by the Court where the payor, for example, had major health issues forcing him or her into retirement, when support had already been paid for a considerable amount of time, or if the parties’ separation agreement contemplated an early retirement.
Courts, however, are not sympathetic to support payors who voluntarily retire early for their own benefit. In Cossette v Cossette, the husband retired early as soon as he was eligible for an unreduced pension at age 55. As a result, his annual income dropped from $104,000.00 to $48,000.00. The Appellate court held that “a support payor cannot choose to be voluntarily under-employed whether by retirement or otherwise and thereby avoid his or her spousal payment spousal support payment obligations”. If a support payor is shown to have retired early to frustrate his support obligations, his income may be imputed up to the amount he would have been earning prior to retirement.
