Currently, any money paid to a Canadian Forces veteran for a disability pension under the Pension Act as compensation for a disability resulting from military duty is offset from the amount paid out by Service Income Security Insurance Plan Long Term Disability (SISIP LTD) as monthly income replacement benefits.
The SISIP LTD plan guarantees Canadian Forces members 75 per cent of their previous salaries for up to two years if they are released, because of a service-related disability. Payments can continue to age 65 if the member remains disabled. However, SISIP LTD does not necessarily pay the whole 75 per cent. In fact, any other source of income a former member receives is taken into account and offset from the amount SISIP LTD pays directly.
Veterans Affairs Canada disability pensions, even though they are not considered income but disability benefits to compensate for injuries suffered in the line of duty, are considered a source of income by SISIP. There is a contradiction in that still serving members can receive a VAC disability pension, while still collecting their full salary.
Furthermore, with the introduction of the Canadian Forces Members and Veterans Rehabilitation and Compensation Act, this inequity will likely be corrected; however, these provisions will not be retroactive. Those collecting VAC benefits under the Pension Act will continue to have their SISIP benefits reduced.
For example, let us consider two master corporals serving in the same unit, both married with one child, with eight years of military service. MCpl. A suffers an injury that leaves him permanently disabled. But the disability is not severe enough to prevent him from continuing to serve in the Canadian Forces. He is deemed eligible for a VAC disability pension of 20 per cent, resulting in a monthly disability pension of approximately $550.00. Assuming no aggravation, he would continue to receive at least this amount, tax free, for the rest of his life. Were he to serve another 20 or 25 years, he could retire with a full superannuation pension based at his salary at a higher rank than when he was injured. His VAC pension would never be at risk, nor considered income, even after he had retired.
MCpl. B also suffers an injury but his injury is much more serious to the point where he is released from the CF as medically unfit. He is awarded a VAC disability pension of 70 per cent which equates to approximately $1,950.00/month. His physical impairment is so serious that he has very few chances of finding civilian employment. With only eight years of service, he will not qualify for a superannuation pension. Under SISIP LTD benefits, he will only be eligible for 75 per cent of his CF salary. Unfortunately, the value of his VAC pension will be subtracted from his LTD SISIP payments.
These two very common examples demonstrate an unfairness in the present SISIP LTD benefits that needs to be corrected. VAC disability pension benefits are not income. This reality is recognized in the Canadian Forces Member and Veterans Rehabilitation and Compensation Act, often called the new Veterans Charter, which provides a non-taxable lump sum to compensate for pain and sufferance.
The Legion has asked that the Department of National Defence and SISIP correct this inequity.
Notice of Class Action regarding the reduction of
Long Term Disability Benefits by the amount of Pension Act Payments...more.