Research & Publications

Damages: Estimating Pecuniary Loss (Chapter 2)

by Cara L. Brown

Chapter 2 - Augmenting the Base Salary for Fringe Benefits

Salary is not the only component of a person's income. In addition, employers contribute to various benefit plans on behalf of their employees, thus providing them with a form of non-wage compensation. Chapter 2 explores fringe benefits such as contributions by employers within different industries and sectors of the workforce to group life insurance, hospital and health insurance, dental insurance, and short/long-term disability insurance. Loss of pension benefits is often a significant loss to plaintiffs and this chapter addresses the frequency of participation in pension plans in Canada, the valuation principles for loss of pension benefits, and when to assess loss of pension benefits as a distinct head of damage (calculating commuted value) versus including it in the fringe benefits contingency. Dovetailing with a discussion regarding loss of pension benefits is an analysis of the methodology used to value pension benefits for the purposes of dividing marital property upon marriage breakdown. Topics covered include an overview of common terms used in valuing pensions; the retirement method versus the termination method; the value-added method versus the pro-rata method; the retirement age assumption and whether to include survivorship benefits in matrimonial pension valuations.