OTTAWA - Canada's Department of Veterans Affairs has ended its long-standing, controversial policy of clawing back the benefit payments of disabled soldiers, sailors and aircrew — a move critics say has been far too long in coming.
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.
Also on HuffPost:
Big Canada Pension Plan Changes Coming In 2012
Ottawa is bringing in a raft of new or tweaked policies to reflect that retirement these days is more of a gradual transition for many people rather than a single event. Many of these changes either begin in 2012 or are entering the next phase-in period, and they'll have a direct impact on the retirement plans of Canadians. In some cases, the changes are big enough that people nearing retirement may want to have a chat with a financial adviser before deciding exactly when to apply for a CPP retirement pension. (Justin Sullivan/Getty Images) <em>With files from CBC</em>
1. Early CPP, Lower Benefits
The first change involves payment rates. People can choose to take a CPP retirement pension as early as age 60. But there's a catch: A 0.5 per cent reduction in the pension payout for each month before age 65 that someone begins receiving it. That translates into a retirement benefit that's 30 per cent less at age 60 that it would be if you waited until 65. Starting in 2012, Ottawa is beginning to phase in a bigger reduction to get that early access. For 2012, the penalty rises to 0.52 per cent per month -- or a 31.2 per cent reduction for someone who starts receiving their retirement pension at age 60. The early-bird reduction will continue to rise until 2016, when it hits 0.6 per cent per month, or a maximum 36 per cent reduction for those who start receiving CPP payments at age 60 rather than waiting until they reach 65. (Getty)
2. Later CPP, Bigger Benefits
Similarly, those who wait until after the age of 65 to start collection CPP will get a bigger increase in their retirement benefit. Before 2011, the rules stated that the CPP retirement benefit was boosted by 0.5 per cent for each month after age 65 that an individual put off receiving it. So someone who waited until age 70 would enjoy a 30 per cent boost in their payments. But starting in 2011, the government began to phase in a gradual increase to that delay bonus. For 2012, the increase for each month after 65 that a person delays applying for CPP goes to 0.64 per cent -- or a maximum increase of 38.4 per cent for those who start receiving a pension at age 70. By 2013, the maximum bonus moves to 42 per cent. These changes won't affect people who are already receiving CPP benefits. They are being made, according to Service Canada, to restore these adjustments to "actuarially fair levels," so there are "no unfair advantages or disadvantages to early or late take-up of CPP retirement benefits." (Getty)
3. Drop-Out Years Increase
Canadians currently don't need to contribute to the CPP every year from age 18 to age 65 to get a full CPP retirement pension. When someone's average earnings over their contributory period are calculated, 15 per cent of their lowest earning years are automatically ignored when the calculation is made. For someone who takes their CPP retirement pension at age 65, that means seven years of low or zero earnings are dropped from the equation. But starting in 2012, that "general drop-out provision," as it's called, goes up to 16 per cent. For someone eligible for CPP benefits in 2012, that will allow up to 7.5 years of the lowest earnings to be excluded from the calculations -- boosting the retirement benefit paid. In 2014, the percentage will rise again to 17 per cent, which will allow up to eight years of low earnings to be dropped. These changes can really benefit people who entered the workforce late, who were unemployed for a long time, or took time off to go back to school. One point to note is that there are separate drop-out provisions specifically for time spent out of the workforce because of disability or to have children. (Alamy)
4. 'Work Cessation Test' Dropped
CPP rules used to require that someone stop or drastically reduce the amount they earned during the two consecutive months before they began to receive a CPP retirement pension. This was, for many Canadians, an annoying and costly requirement -- especially since so many people now ease into retirement instead of stopping work completely. Now, that rule is history. Beginning in 2012, the "work cessation test" has been eliminated. (<a href="http://www.flickr.com/photos/misteraitch/" target="_hplink">Flickr: misteraitch</a>)
5. Post-Retirement Benefits
There's another rule change that's important for semi-retirees to be aware of. Before 2012, if someone started receiving a CPP retirement pension early -- say, at age 62 -- they didn't have to make any CPP contributions if they decided to collect payments but also keep working after age 62. Starting this year, if you are under age 65 and continue to work while also drawing a retirement pension, you and your employer must make CPP contributions. The good news for employees is that these extra contributions will be credited to what's called a Post-Retirement Benefit (PRB), which will result in a higher CPP retirement pension in the year after you make contributions to your PRB. This measure is a nod to the reality that many "retired" Canadians are still working. Canadians who continue working after age 65 and are receiving a retirement benefit will have the choice of whether or not they want to make CPP contributions. If they choose to make them, their employer must kick in their share too. Those additional contributions will go towards higher benefits beginning the year after the PRB contributions. (<a href="http://www.flickr.com/photos/elwillo/" target="_hplink">Flickr: Keith Williamson</a>)
6. Premiums And Benefits Rise
CPP benefits are always adjusted to reflect the rising cost of living. For 2012, the increase in benefits is 2.8 per cent. That will bring the maximum monthly CPP retirement pension to $986.67. Contribution rates are unchanged. But since the yearly earnings maximum that the rate applies to is going up, the maximum annual contribution will rise by about $89 in 2012 to $2,306.70 for both employees and employers. (<a href="http://www.flickr.com/photos/redvers/" target="_hplink">Flickr:R/DV/RS</a>)