ARCHIVED — Vol. 146, No. 21 — October 10, 2012
SOR/2012-195 September 28, 2012
CANADIAN FORCES MEMBERS AND VETERANS RE-ESTABLISHMENT AND COMPENSATION ACT
Regulations Amending the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations
P.C. 2012-1138 September 27, 2012
His Excellency the Governor General in Council, on the recommendation of the Minister of Veterans Affairs, pursuant to section 94 (see footnote a) of the Canadian Forces Members and Veterans Re-establishment and Compensation Act (see footnote b), makes the annexed Regulations Amending the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations.
REGULATIONS AMENDING THE CANADIAN FORCES MEMBERS AND VETERANS RE-ESTABLISHMENT AND COMPENSATION REGULATIONS
1. Paragraph 22(a) of the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations (see footnote 1) is repealed.
2. Paragraph 23(a) of the Regulations is repealed.
3. Paragraph 37(c) of the Regulations is replaced by the following:
- (c) disability pension benefits payable under the Royal Canadian Mounted Police Pension Continuation Act or the Royal Canadian Mounted Police Superannuation Act other than amounts payable for a dependent child;
COMING INTO FORCE
4. These Regulations come into force on October 1, 2012, but if they are registered after that day, they come into force on the day on which they are registered.
(This statement is not part of the Regulations.)
Issues: On May 29, 2012, the Government of Canada announced it would not appeal the May 1, 2012, Federal Court decision in the class action lawsuit, Manuge v. the Queen, regarding the offset of Pension Act disability pension from the Department of National Defence (DND) Service Income Security Insurance Plan (SISIP). The Government also announced that it would also cease the use of Pension Act disability pensions as offsets when calculating amounts paid in Veterans Affairs Canada (VAC) Earnings Loss (EL), Canadian Forces Income Support (CFIS) and War Veterans Allowance (WVA) benefits. As of July 1, 2012, DND ceased the use of the disability pension as an offset in calculating the SISIP-Long Term Disability (SISIP-LTD) benefit, creating an unintended difference between comparable VAC and DND benefits.
Description: Regulatory amendments to the Canadian Forces Members and Veterans Re-establishment and Compensation Regulations (the CFMVRC Regulations) are required to cease using the Pension Act disability pension as an offset for the purpose of determining the amount of EL and CFIS benefits payable. These amendments ensure VAC EL and CFIS benefits are consistent with the DND SISIP-LTD benefit, which no longer considers the Pension Act disability pension as an offset for determining amounts of benefits payable.
Cost-benefit statement: The regulatory amendments will cost VAC an average of $49.1M/year over the next 10 years, and provide an equivalent direct benefit to eligible EL and CFIS recipients.
“One-for-One” Rule and small business lens: The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
The Government of Canada provides eligible modern-day Canadian Forces veterans (and in some cases eligible survivors and orphans) financial benefits through the Department of National Defence (DND) Service Income Security Insurance Plan-Long Term Disability (SISIP-LTD) benefit through an insurance policy contact or through Veterans Affairs Canada (VAC) Earnings Loss (EL) and Canadian Forces Income Support (CFIS) benefits offered under the Canadian Forces Members and Veterans Re-establishment and Compensation Act (the CFMVRC Act), commonly referred to as the New Veterans Charter.
On May 1, 2012, the Federal Court ruled in Manuge v. the Queen that the offset of the Pension Act disability pension from the SISIP-LTD benefit was in breach of the policy contract. The Court concluded that the monthly payments made under the Pension Act were not monthly income benefits payable under the Pension Act within the meaning of the SISIP-LTD Insurance Policy. Rather, it was a disability entitlement for the loss of personal amenities. Because the monthly payments were not a form of income replacement, they were not caught by the benefit offset in the section of the SISIP-LTD Insurance Policy. There was therefore no authority or contractual basis for reducing the LTD benefits by the amount of the Pension Act disability pension. In rendering its decision, the Federal Court indicated that programs at Veterans Affairs were not affected by its ruling.
On May 29, 2012, the ministers of National Defence and of VAC announced that the Government of Canada would not appeal the Federal Court’s decision in Manuge v. the Queen and would cease the offset of Pension Act disability benefits from SISIP-LTD benefits. At the same time, the ministers announced that the Pension Act disability benefits offset would also cease for EL, CFIS, and the War Veterans Allowance (WVA) benefits to ensure a consistent approach between VAC and DND.
As of July 1, 2012, SISIP has ceased offsetting VAC Pension Act disability pension from the SISIP-LTD benefit.
Description of disability benefits
The SISIP-LTD plan is a Treasury Board-supported disability group insurance plan administered by SISIP Financial Services. The LTD provides a Canadian Forces (CF) member with replacement income protection if they are medically released from the CF, or if they become totally disabled. This plan is also designed to prepare the person to obtain gainful civilian employment through participation in its Vocational Rehabilitation Program, if required.
The VAC EL benefit is provided to CF veterans who are released from the CF due to medical reasons and apply within 120 days of release and require rehabilitation needs or vocational assistance services. The benefit is also payable to CF veterans who have service-related rehabilitation needs and are no longer (or were never) eligible to receive SISIP-LTD. The EL benefit, provided under the CFMVRC Act, is payable monthly in recognition of the economic impact that a career-ending or service-related disability may have on a veteran’s ability to earn income following release from the CF.
The EL benefit was designed to be comparable to the DND SISIP-LTD benefit to ensure all veterans would receive similar benefits. Until July 1, 2012, both financial benefits were calculated in an identical manner — specified sources of income were deducted to arrive at the actual amount of benefits to be paid. As of July 1, 2012, disability pensions were no longer considered a source of income to determine SISIP-LTD benefits to be paid.
The VAC CFIS benefit is also authorized by the CFMVRC Act for veterans whose EL benefit has ceased due to the veteran’s completing a VAC Rehabilitation Program or because the veteran has turned 65. This monthly benefit is intended to ensure that veterans who have completed rehabilitation but are unable to find employment have a level of income to meet basic needs while they are engaged in a job search. In certain cases, survivors and orphans may also be eligible.
The maximum amounts payable are set out in the CFMVRC Act and vary depending on an eligible recipient’s circumstances (e.g. married). Monthly incomes and benefits are deducted from the maximum amount payable to arrive at the actual CFIS benefit paid.
The VAC WVA benefit provides financial assistance to veterans of the Second World War and the Korean War, and, in some cases, qualified civilians. Similar to the CFIS benefit provided to modern-day veterans, the WVA benefit acts as an income support for wartime service veterans. The WVA benefit is payable in the form of a monthly grant to low-income veterans. Eligibility is determined by the wartime service of a veteran or qualified civilian, their age or health, and their income and residency. As with EL and CFIS benefits, various monthly incomes and benefits are considered as offsets in determining the amount of WVA benefits to be paid.
As of July 1, 2012, SISIP-LTD ceased deducting the Pension Act disability pension amount in calculating the amount to be paid, while the EL and CFIS benefit calculations continued to deduct the Pension Act disability pension amount. This has created an inconsistency in the calculation of similar VAC and DND benefits.
These Regulations respond to the federal government’s May 29, 2012, commitment and allow VAC to cease offsetting VAC Pension Act disability pension in the calculation of the EL and CFIS benefits on a go-forward basis.
Regulatory amendments to the CFMVRC Regulations will remove the disability pension payments as offset income in the calculation of EL and CFIS benefits payable to veterans and survivors. These amendments ensure VAC EL and CFIS benefits are consistent with the DND SISIP-LTD policy.
With the coming into force of these regulatory amendments, the Pension Act disability pension is no longer used as an offset in the calculation of EL and CFIS benefits.
Regulatory and non-regulatory options considered
The CFMVRC Regulations prescribe the various sources used as offsets when calculating EL and CFIS benefits, including disability pension benefits payable under the Pension Act. To meet the objectives of this submission, only regulatory amendments to the CFMVRC Regulations are required.
Benefits and costs
The Regulations will result in an average annual cost of $49.1M over the next 10 years. This cost will lead to a direct equivalent benefit (annual average of $49.1M over the next 10 years) for eligible CFIS and EL recipients. Consequently, some of these individuals will see increases in their monthly benefits and some, who may have been previously ineligible to receive these benefits due to excess income, may now be eligible.
|Base Year: 2012–13||Final Year: 2021–22||Total (PV)||Average Annual|
|Quantified impacts (millions of dollars)|
Veterans Affairs Canada
Eligible EL and CFIS recipients
Eligible veterans, their survivors and orphans:
Government of Canada:
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
This regulatory proposal does not increase or decrease administrative burden or compliance costs on small businesses.
Canada’s veterans’ organizations have been advocating for improvements to VAC’s programs and services, including ending the practice of offsetting VAC Pension Act disability pension from VAC benefits. The VAC Ombudsman has also been a strong advocate by addressing this issue in an observation paper entitled “Service Income Security Insurance Plan and its Influence on the Calculation of the Veterans Affairs Canada Earnings Loss Benefit.” The veterans’ organizations as well as former VAC advisory group members have expressed that they are pleased with the Federal Court ruling regarding the offset of the Pension Act disability benefits from the SISIP-LTD benefit.
With the passage of each month, there is a growing concern from veterans and other eligible persons that disability pension offsets are still being taken into consideration when calculating EL and CFIS benefits and WVA. VAC recognized this and worked, and continues to work, to have the changes implemented as early as possible.
As part of the Government of Canada’s continued commitment to ensure Canadian Forces members and veterans receive the full care and support they have earned and deserve, the Government is restoring consistency between DND SISIP-LTD and VAC benefits.
As a first step to achieve this desired consistency and to fulfill the Government of Canada’s commitment, the CFMVRC Regulations had to be amended to cease the disability pension offset in the calculation of EL and CFIS benefits. These regulatory changes demonstrate the Government of Canada is again taking action for veterans and their families, and reinforce the 2012 Speech from the Throne, which stated, in part, that “Our Government will continue to recognize and support all veterans.”
Further amendments will be sought to allow VAC to cease offsetting the disability pension in the calculation of the WVA benefit and effect any other changes as informed by the settlement of the class action lawsuit Manuge v. the Queen. Amendments to WVA benefits require legislative and regulatory amendments.
Implementation, enforcement and service standards
These regulatory amendments allow eligible veterans, survivors and orphans to receive EL or CFIS benefits without offsetting Pension Act disability benefits. Those affected by these regulatory amendments will be advised of the changes and potential favourable impacts. Specific groups, including new applicants, those currently receiving a monthly benefit and eligible individuals who have a disability pension, but are not currently receiving a monthly EL or CFIS payment due to excess income, will be provided information tailored to their specific situations. Veterans and stakeholders will be informed by a Minister’s announcement.
Implementation work was completed internally with adjustments to policies, procedures, systems and processes. Following the coming into force date, staff will immediately begin to re-calculate the files of disability pension recipients who also receive EL or CFIS benefits in order to remove the offset of VAC disability pension. Due to the processing timelines and the fact that a manual intervention is required in each case, some individuals may not see the discontinuation of the offsetting of the disability pension until their November 2012 payment. Adjustment cheques will be issued to these recipients for any monies that should have been paid as of the coming into force date of October 1, 2012.
When the recalculations are made, a letter will be sent to the recipients to provide the details of the recalculation, both in terms of the new monthly payment that will be made, as well as, if applicable, the adjustment amount being issued for the month of October.
Where veterans or survivors are not in receipt of EL benefits due to the disability pension offset, VAC will send a letter to explain the regulatory change and request current income information. This information is necessary to determine if the veteran or survivor will qualify for an EL benefit payment.
Performance measurement and evaluation
VAC’s Audit and Evaluation Division regularly audits programs and services such as EL and CFIS benefits. Results are published on VAC’s Web site regularly.
VAC also has published service standards, with specific service standards for EL and disability benefits. The regulatory changes will not impact these service standards.
Acting Senior Director
Strategic Policy Integration
Policy and Research Division
Veterans Affairs Canada
161 Grafton Street
Daniel J. MacDonald Building, Room 436
Charlottetown, Prince Edward Island
S.C. 2011, c. 12, s. 17
S.C. 2005, c. 21