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441-00014 (Social affairs and equality)

Paper petition

Original language of petition: English

Petition to House of Commons

We, the undersigned, citizens and residents of Canada, call upon the House of Commons to permit recipients of CPP Disability Benefits to keep these benefits at the age of 65 instead of changing them to CPP Retirement Benefits. We feel that it is unfair for the benefit amount to be lowered since a person with permanent disabilities does not stop having these at the age of 65.

For citizens who receive CPP Disability benefits, CPP contributions are lower than for other citizens, as full-time employment is not allowed while receiving the benefits. This results in citizens who receive the CPP Disability benefit receiving significantly lower CPP Retirement benefits at the age of 65. In addition, child care and a lack of living family support can put citizens receiving Disability benefits at an additional disadvantage financially. The cutoff to receive GIS is a max of $18,240 per year for a single person, which can be a significant decrease in annual income.

Please make every effort to change this situation as noted.

Response by the Minister of Employment, Workforce Development and Disability Inclusion

Signed by (Minister or Parliamentary Secretary): Irek Kusmierczyk

The Canada Pension Plan (CPP) is a mandatory social insurance plan, to which virtually all Canadian workers outside of Quebec with earnings above $3,500 contribute. The CPP provides contributors and their dependent family members with a measure of income protection against the loss of earnings resulting from retirement, disability, or death. Workers in Quebec contribute to the Quebec Pension Plan (QPP), which is a provincially run public plan comparable to the CPP. While it is primarily a retirement plan, the CPP also provides supplementary disability and survivor benefits, which reflect the social insurance nature of the Plan and are not a direct return on contributions. 

The CPP retirement pension provides workers in Canada with partial income replacement upon retirement.  That is to say, it partially replaces the individual’s earnings from work when they withdraw from the labour force. Whereas, the fundamental purpose of the CPP disability pension is to assist working-age individuals who become severely disabled and can no longer work on a regular basis. Specifically, it partially replaces the earnings lost when the severity of the disability of an individual under the age of 65 will no longer allow them to engage in substantially gainful employment. The CPP is the largest long-term disability program in Canada. 

When the CPP was established in 1966, it was decided that it would operate in conjunction with other income security programs. In the case of the retirement pension, the earnings-related CPP works together with the flat rate Old Age Security (OAS) pension. As individuals who are under the age of 65 do not yet qualify for benefits under the OAS program, it was decided that the CPP disability pension should include a flat rate component.  It also includes an earnings-related component based on the number and level of contributions that a person had made to the Plan up until the date that he or she is deemed to have become disabled. This earnings-related component is equal to 75% of a CPP retirement pension based on those contributions.

At age 65, the disability pension is automatically converted to a retirement pension, which increases the amount of the earnings-related component but does not include the flat rate.  However, at this age, most Canadians become eligible for the OAS pension. The combination of the CPP retirement pension and OAS pensions generally provide individuals with a higher level of income from Canada’s Public Pensions than the disability pension that they had been receiving previously. In addition, low-income seniors aged 65 and over may also receive the income-tested Guaranteed Income Supplement, depending on their level of income. 

Additionally, the CPP contains provisions that protect the value of the retirement pension provided to a contributor with a disability. When calculating the base portion of the retirement pension, the years in receipt of a disability pension are excluded from the calculation, increasing the contributor’s average earnings and thus, their retirement pension amount. When calculating the enhancement component, the CPP credits (or “drops-in”) earnings for the years spent in receipt of the disability pension, based on the individual’s earnings before the onset of their disability. These provisions increase the amount of the contributor’s retirement pension.  As a result, individuals who converted from a disability pension, on average, receive a higher retirement than other contributors ($720.09 per month compared to $603.57 in November 2021).

Reflecting these principles and the fact that the two pensions provide the same purpose: replacing the contributor’s earnings from work, the CPP legislation does not permit the retirement pension and the disability pension to be paid to an individual at the same time.  However, as of 2019, individuals under age 65 who are collecting an early retirement pension and are deemed to be disabled may receive the post-retirement disability benefit if they have a severe and prolonged disability. This benefit is equal to the flat rate of the disability pension and is added to the retirement pension until age 65, when the contributor becomes eligible for the OAS pension.

As the CPP is under the shared responsibility of the federal and provincial governments, the Government of Canada cannot make any major changes with cost implications to the CPP unilaterally. Major amendments require the approval of Parliament and two-thirds of the provinces representing two-thirds of the population. Finance Ministers review the CPP every three years to ensure its financial health and to ensure that its benefits remain relevant in the face of the evolving needs of Canadians.

There is also an ongoing requirement for any changes to the CPP that would increase or add new benefits to be fully funded. This means that changes that increase benefits or add new benefits must be accompanied by a permanent increase in contribution rates to cover the extra costs, which will be paid for by the generations that benefit. Increasing CPP disability benefits for current recipients could place financial pressure on the Plan, which would run counter to the legal requirement for full-funding. That is to say, such an increase would not be paid for by the generation receiving it, rather, it would increase the contribution rate paid by today’s workers and their employers.

The Government of Canada is firmly committed to maintaining a strong and stable public pension system for the financial security of Canadians. Not only must the Plan be equitable and sustainable for today’s retirees, but it must also meet the needs of future generations. The rules governing the CPP strive to strike a balance between the long-term sustainability of the Plan and its flexibility and fairness to individuals in planning their retirement. With this strong fiscal framework in place, workers and their families can be confident that the CPP will be there for them when they need it.

Presented to the House of Commons
Alex Ruff (Bruce—Grey—Owen Sound)
November 26, 2021 (Petition No. 441-00014)
Government response tabled
January 31, 2022
Photo - Alex Ruff
Bruce—Grey—Owen Sound
Conservative Caucus
Ontario

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