Canada Pension Plan Disability Pension, Post-retirement Disability Benefit, Disabled Contributor’s Child’s Benefit and Retirement Pension Overpayments Remission Order: SI/2024-66

Canada Gazette, Part II, Volume 158, Number 26

Registration
SI/2024-66 December 18, 2024

FINANCIAL ADMINISTRATION ACT

P.C. 2024-1303 December 9, 2024

Her Excellency the Governor General in Council, considering that the collection of certain amounts is unreasonable and unjust, on the recommendation of the Treasury Board, the Minister of State (Seniors) and the Minister of Citizens’ Services, makes the annexed Canada Pension Plan Disability Pension, Post-retirement Disability Benefit, Disabled Contributor’s Child’s Benefit and Retirement Pension Overpayments Remission Order under subsection 23(2.1)^{footnote a} of the Financial Administration Act ^{footnote b}.

Canada Pension Plan Disability Pension, Post-retirement Disability Benefit, Disabled Contributor’s Child’s Benefit and Retirement Pension Overpayments Remission Order

Definition of Minister

1 In this Order, Minister means the Minister of Employment and Social Development.

Disability pension or post-retirement disability benefit

2 (1) Remission of the amount determined under subsection (2) is granted to any person who received a disability pension or a post-retirement disability benefit after that pension or benefit ceased to be payable to them under subsection 70(1) or section 70.02, respectively, of the Canada Pension Plan if

• (a) the Minister received information before July 1, 2022 indicating that a determination ought to be made as to whether, before January 1, 2021, the pension or benefit had ceased to be payable;
• (b) the Minister did not, before November 1, 2023, advise the person of any determination made, following the Minister’s receipt of the information referred to in paragraph (a), as to whether the pension or benefit had ceased to be payable;
• (c) during the period starting on November 1, 2023 and ending on March 31, 2025, the Minister sent the person a letter advising them that it had been determined that the pension or benefit had ceased to be payable to them and indicating the month in which it ceased to be payable; and
• (d) the person did not commit fraud or knowingly make a false or misleading statement or declaration in relation to their eligibility for the pension or benefit.

Amount remittted

(2) The amount to be remitted is equal to the total amount of all disability pension or post-retirement disability benefit payments made to the person for any month after the month in which the pension or benefit ceased to be payable, as indicated in the letter referred to in paragraph (1)(c) or as determined, as the case may be, as a result of one of the following:

• (a) a decision of the Minister under section 81 of the Canada Pension Plan;
• (b) a decision of the General Division of the Social Security Tribunal on an appeal, under section 82 of the Canada Pension Plan, of a decision referred to in paragraph (a);
• (c) a decision of the Appeal Division of the Social Security Tribunal on an appeal, under section 55 of the Department of Employment and Social Development Act, of a decision referred to in paragraph (b);
• (d) a decision of the Federal Court of Appeal on an application for judicial review, under paragraph 28(1)(g.1) of the Federal Courts Act, of a decision referred to in paragraph (c); or
• (e) a decision of the Supreme Court of Canada on an appeal of a decision referred to in paragraph (d).

Disabled contributor’s child’s benefit

3 (1) If a disabled contributor’s child’s benefit was payable in respect of a disabled contributor whose disability pension or post-retirement disability benefit was the subject of a determination referred to in paragraph 2(1)(c), remission of the amount determined under subsection (2) is granted to

• (a) any person who received the disabled contributor’s child’s benefit after that benefit ceased, under paragraph 76(1)(c) of the Canada Pension Plan and as a result of that determination, to be payable to them; and
• (b) any person or agency referred to in section 75 of the Canada Pension Plan that received the disabled contributor’s child’s benefit after that benefit ceased, under paragraph 76(1)(c) of the Canada Pension Plan and as a result of that determination, to be payable to a child for whom they had decision-making responsibility.

Amount remitted

(2) The amount to be remitted is equal to the total amount of disabled contributor’s child’s benefit payments made to the person or agency for any month after the month in which the benefit ceased to be payable.

Retirement pension

4 Remission is also granted, to any person to whom remission is granted under section 2, of any amount of retirement pension that they received in excess of that which they should have received on the basis of the disability pension having ceased to be payable to them in the month referred to in subsection 2(2), assuming that the retirement pension had still become payable to them starting with the month in which they reached 65 years of age.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

The Governor General in Council, considering that the collection of certain overpayments is unreasonable and unjust, pursuant to subsection 23(2.1) of the Financial Administration Act, makes the Canada Pension Plan Disability Pension, Post-retirement Disability Benefit, Disabled Contributor’s Child’s Benefit and Retirement Pension Overpayments Remission Order (the Order).

The Order will allow, subject to certain conditions, for the remission of overpayments incurred by beneficiaries of the Canada Pension Plan (CPP) Disability Pension and the Post-retirement Disability Benefit (PRDB) and their dependent children for whom there was a delay in processing the reassessment of continuing eligibility.

Objective

The objectives of the Order are

• (1) To limit the financial burden resulting from the failure to process reassessments in a timely manner by remitting debts to the Crown of
  • certain beneficiaries of a CPP Disability Pension or PRDB who were found to be ineligible and received benefit payments to which they were not entitled for a period of time; and
  • certain beneficiaries of the Disabled Contributor’s Child’s Benefit (DCCB) or CPP Retirement Pension who received benefit payments, or a portion thereof, to which they were not entitled as a result of the CPP Disability Pension or PRDB reassessment outcome;
• (2) To ensure that the Canada Pension Plan Disability (CPPD) program continues to be responsive to the needs of Canadians with disabilities by maintaining effective stewardship of CPP funds in an open and transparent manner.

Background

The CPPD program is the largest long-term disability insurance program in Canada. It is administered throughout Canada, except in Quebec, where the Quebec Pension Plan provides similar supports to eligible individuals. CPPD benefits include the Disability Pension and the PRDB. The Disability Pension is for individuals who are found to be disabled and are under age 65, while the PRDB is a flat-rate benefit for individuals between the ages of 60 and 65 who are already in receipt of an early CPP Retirement Pension and become disabled. The DCCB is an associated benefit for the dependent children of a CPPD beneficiary (either the Disability Pension or the PRDB) and is a flat-rate amount. CPPD benefits provide partial income replacement for eligible contributors who have a severe and prolonged mental or physical disability that regularly prevents them from working at any substantially gainful occupation.

CPPD beneficiaries are entitled to receive benefit payments for as long as they continue to be eligible. They are obligated to report to Employment and Social Development Canada (ESDC) when they return to work, participate in volunteer and education activities or when there is a change in their medical condition(s), as this may indicate that they are no longer disabled within the meaning of the CPP.

There is also a responsibility on the part of ESDC to conduct timely reassessments of continuing eligibility to ensure CPPD benefits are paid only to those who continue to be eligible and ceased for those who are no longer eligible. To facilitate the process, ESDC identifies files that may require reassessment in a variety of ways, including self-reports from beneficiaries who have returned to work, pre-scheduled reassessments, third-party complaints, and information from the Employment Insurance program and the Canada Revenue Agency.

During the COVID-19 pandemic, ESDC prioritized the processing of applications for the Disability Pension, as well as those for the PRDB and DCCB to ensure that disabled contributors and their dependent children received benefits during a period of economic crisis. Due to capacity restraints, most work was halted on existing open reassessments for older files. As a result, there is an inventory of older files pertaining to 2020 or earlier, for which ESDC has information indicating a reassessment of eligibility should take place. Some of these files have information reaching back more than 10 years. As a result of the delay in processing the reassessments, overpayments have accrued for many of the beneficiaries in the inventory. Other factors contributed to delays in processing reassessments and increased inventory volumes, including

• Limited communication with beneficiaries during the COVID-19 pandemic. An information sheet was issued in May 2022 to beneficiaries to clarify their reporting obligations, which led to an influx of beneficiaries reporting their return to work, many of them several years late. This resulted in a sudden increase in priority reassessment files, further delaying existing older reassessments.
• Insufficient resource capacity, which contributed to delays in actioning and completing aged reassessment files. Additionally, the complexity of CPPD (e.g. earnings and contributions requirements, severe and prolonged eligibility criteria, appeals, comorbidities and mental health, etc.) means that it takes time for new staff to attain the full skill set and knowledge required to be fully productive.

Delayed CPPD reassessments can result in large overpayments, not just of the Disability Pension and PRDB, but also the DCCB and the Retirement Pension. The DCCB is only payable when the parent or guardian is eligible for the Disability Pension or PRDB. DCCB beneficiaries incur overpayments when their parent or guardian’s Disability Pension or PRDB is retroactively ceased. Because the Disability Pension automatically converts to a Retirement Pension when an individual turns 65, a reassessment of a previous Disability Pension which results in the individual being deemed retroactively ineligible can result in a Retirement Pension overpayment. The Retirement Pension is calculated based on an individual’s contributory period: how much and for how long they contributed to the CPP. When an individual is in receipt of the Disability Pension, those years are excluded from their contributory period. If they are retroactively found to have not been eligible for the Disability Pension, those years must be included in their contributory period and a recalculation of their Retirement Pension amount is required. Any years with low or no earnings lower the amount of the Retirement Pension, which can result in a Retirement Pension overpayment.

Negative impacts to clients’ contributory periods can also occur when CPPD reassessments are delayed, which can result in lower retirement pensions, issues requalifying for and receiving other CPP benefits, and financial hardship for clients who are required to repay refunded CPP contributions. Beneficiaries do not contribute to the CPP when they are receiving a CPPD benefit, during periods when they have no earnings, or when their annual earnings are below the minimum threshold of $3,500. When a beneficiary returns to work while receiving CPPD benefits, any CPP contributions they make are refunded to them with their tax assessments. However, should a beneficiary be found to have received a CPPD benefit when they were not entitled, they will need to repay the CPP contributions that were refunded to them for that period. If they do not, they may not qualify for other CPP benefits (including disability, death, survivor, and children’s benefits) and/or it may impact the amount of future CPP benefits they may receive, such as their Retirement Pension.

Although the CPP allows for the recovery of debts at any time, subsection 23(2.1) of the Financial Administration Act provides for the Governor in Council, on the recommendation of the Treasury Board, to make an order remitting debts under certain circumstances. In this case, the Treasury Board has recommended the remission of the overpayments on compassionate grounds since CPPD beneficiaries faced additional challenges during the pandemic, which may still be impacting them today. In addition, CPPD is a long-term disability insurance program, and notwithstanding the need for reassessment of continuing eligibility, it is not the intention to create a situation where clients have large overpayments spanning several years, the collection of which would be unreasonable and unjust, particularly when such large overpayments are the result of the delay caused by ESDC’s workload challenges.

Work to resolve ESDC’s workload challenges, including those regarding the reassessment process itself, has continued in tandem with efforts to remit overpayments through this Order. Strategies are also being developed and implemented to prevent future overpayments of this nature. Activities include improving client correspondence, establishing reassessment service standards, developing automation tools, and implementing a reassessment policy framework. ESDC will also analyze evidence from a pilot project that is testing enhanced return-to-work supports to inform future changes, such improved role alignment with respect to processing staff.

Implications

The Order will allow individuals who received payments for the Disability Pension or PRDB for which they were not entitled and who meet all of the following conditions to have their debt remitted:

• (a) ESDC received information before July 1, 2022, indicating a reassessment of the individual’s eligibility for the Disability Pension or PRDB should take place and the information pertains to the time period prior to January 1, 2021;
• (b) ESDC did not send a reassessment decision to the individual before November 1, 2023, as a result of the information received in (a);
• (c) ESDC sent an initial decision to the individual between November 1, 2023, and March 31, 2025, inclusive, indicating that they are no longer eligible for either the Disability Pension or PRDB; and
• (d) The overpayment was not a result of fraud or misrepresentation.

The Order will also remit the debts of

• any individual who meets the conditions of the Order and received a CPP Retirement Pension greater than the amount they were entitled to receive as a result of the cease of their Disability Pension.

The Order will remit DCCB debts that are the result of the cease of a Disability Pension or PRDB for the following individuals:

• any child over age 18 of a person who meets the conditions of the Order; and
• any person or agency who has decision-making responsibility for the child of a person who meets the conditions of the Order.

If an individual who meets the conditions of the Order challenges the decision to cease their Disability Pension or PRDB and the Minister of Employment and Social Development, the Social Security Tribunal, the Federal Court of Appeal or the Supreme Court of Canada changes the cease date to a date further in the past, resulting in a higher overpayment amount, the new amount will be subject to the Order.

Beneficiaries subject to this Order will have their debt remitted and will not be required to pay back amounts they received for the period they were ineligible for the benefits. However, CPPD clients may be required to repay any CPP contributions that were refunded to them while they were in receipt of CPPD benefits.

The estimated cost of the Order is up to $98.6 million. The remission of these debts results in a reduction in net assets and future revenues which will be borne by the CPP Account.

Consultation

Consultations with internal stakeholders have identified a need for ESDC to act proactively to continue to uphold program integrity while also reducing the extraordinary financial burden and other negative impacts on those clients who are eligible under this Order.

Contact

Tara Belanger-Zahab
Director
Policy and Partnerships
Canada Pension Plan Disability
Income Security and Social Development Branch
Employment and Social Development Canada
Email: tara.belangerzahab@hrsdc-rhdcc.gc.ca