Effective immediately, the Harper government will no longer deduct the amount of a veteran's pension from benefits for lost earnings and Canadian Forces income support, which were introduced in 2006 under the New Veterans Charter.
Veterans Affairs Minister Steven Blaney made the announcement Wednesday at a news conference at Valcartier Garrison, outside Quebec City.
"We have worked quickly to make these changes to put more money in the pockets of veterans and their families, including some who haven't been receiving these benefits until now," Blaney said.
The move is a consequence of last spring's Federal Court ruling, which rejected the clawback of disability benefits from eligible veterans in a case waged against the Department of National Defence.
Back in July, Defence Minister Peter MacKay ended the deduction for most disabled soldiers, but it took a special cabinet order passed just recently to get the measure enacted for those affected under the veterans affairs system.
Ending the clawback immediately will cost the federal treasury $177.7 million over the next five years.
Depending upon the severity of the injury and whether they receive the earnings loss or the income support benefit, the change could mean between $1,100 and $1,500 per month to individual veterans.
More changes are on the way, affecting those veterans who entered the system prior to the introduction of the updated veterans charter.
"We are also working quickly to make the necessary legislative changes to the War Veterans Allowance Act so a disability pension will no longer be considered when calculating the War Veterans Allowance benefit," Blaney said.
New Democrat veterans critic Peter Stoffer said he was pleased with the decision, but irritated by the government's blatant politicking — including the claim it has "worked quickly" to help affected veterans.
The Conservative government could have implemented Wednesday's changes years ago, Stoffer said.
"It's hard to criticize them when they do the right thing, but these problems have been around a lot longer than the current government and it is something they should have done when they came to office," he said.
"They're not doing this out of the goodness of their heart. They're doing it because a judge ordered them to."
The changes announced Wednesday are separate from ongoing negotiations meant to establish retroactive compensation for disabled military veterans, many of whom have had their pensions deducted since 1976.
Some internal government estimates suggest that settlement could run as high as $600 million, depending upon the cut-off date established through negotiations involving lawyers for 4,500 veterans who launched a class-action lawsuit and federal negotiators led by Stephen Toope, the president of the University of British Columbia.
Veterans affairs officials, speaking on background, said the issue of retroactivity as it relates to Wednesday's announcement will be dealt with "at another point down the road."
Going forward, the veterans department will increase monthly payments starting in November, but issue cheques to make up for the deduction in October.
Groups representing ex-military members, including the Canadian Peacekeepers Association and the Royal Canadian Legion, are generally pleased with the decision.
But the question of money still owing looms large.
"All that is left for Minister Blaney to do is address the retroactive money owed to these veterans back to 2006, when the (New Veterans Charter) was enacted by Parliament," said Ron Cundell, a former sergeant and disabled veteran who runs the website veteranvoice.info.
Wednesday's announcement will have a major impact on modern-day soldiers, Cundell said.
"The Afghan vets who were severely injured and are unable to work will now be able to live a more financially comfortable life."
Stoffer called on the government to settle a separate lawsuit launched by members of the RCMP who've also had their disability pensions clawed back.
The government should also halt deductions for all federal employees whose Canada Pension Plan disability benefits are deducted dollar-for-dollar from their superannuation payments, he added.
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