CPP Disability and the Income Replacement Benefit

unknown Soldier - I like your idea!
Curious to also hear from Big Rex, 45jim and Air log.
They seem to be on top of all this stuff.
I m soon to be 60 years of age I need advice and information to plan.

KetchupKD wrote:Question: if I delay CPP and OAS which we all can defer from 65 to 70 years of age (In my case that is $1009.00 CPP and $601 OAS ) (estimates for November 2019) is there any benefit?

I do not think so as the IRB will keep you at 70%.

It did occur to me as I reread this it could!  If for some reason your DEC was revoked & IRB was taken away. Your CPP and OAS would have continued to increase up to a max of 37% and 42% over the 5 years. As long as your IRB stays in place I do not see any benefit?

What does each of you think?

l would delay them just so VAC is footing the bill, lol

Question: if I delay CPP and OAS which we all can defer from 65 to 70 years of age (In my case that is $1009.00 CPP and $601 OAS ) (estimates for November 2019) is there any benefit?

I do not think so as the IRB will keep you at 70%.

It did occur to me as I reread this it could!  If for some reason your DEC was revoked & IRB was taken away. Your CPP and OAS would have continued to increase up to a max of 37% and 42% over the 5 years. As long as your IRB stays in place I do not see any benefit?

What does each of you think?

45jim & Unknown Soldier,

Both arguments are very valid. As I said it is a personal financial decision that must be thought out very carefully. As I stated in my particular case my (private) LTD provider insisted that I apply. If I didn't I would have been forced off of my LTD in due course. I am 60 years old, DEC and IRB (IRB) for some time now. So, as I said in my particular situation CPPD was the logical path to take. But, if I didn't have LTD then I would have never applied for CPPD. To each his own, but, always look at the big picture how it applies today and down the road.

AirLog

There are a few other things to consider,: not every vet on IRB has DEC or will ever. If a vet has CPPD they are only permitted to earn I think $4-5000, before deductions are made to it, so if a vet was on IRB/DEC and had the ability to be healthy enough to earn even only $20000, they may even lose CPPD. Also, I know a vet who is on IRB but is losing it, but he applied for CPPD a year ago and got it. So even though he is losing his IRB in 30 days, he has something to fall back on. I wouldn`t want VAC to take someone's IRB and then they are just starting the CPPD process, assuming they qualify, because they'd be looking at about 6 months with not much money coming in.

I get your "splaining".

However, the understanding of this situation has to do with your age. Prior to 65 and post 65.

PFL Prior to 65

You need to be on a Rehab plan or Voc training to get IRB and it is locked in at 90% of your release earnings or a minimum of $48,600. You can earn $20,000 while on the Rehab/Voc training before a deduction in your IRB occurs, and once the $20K threshold is reached your earnings are deducted dollar for dollar. However, in "Determination of Variable B (pre-65)" payments from the Canada Pension Plan is a proscribed source so it is deducted dollar for dollar - don't think you will get it under the $20K earnings threshold as it is not "earnings", so there is no benefit to the Veteran. The only caveat is the CPP children's amount which is not deducted for school age children.

Proscribed sources (all deducted at 100%):

a. benefits payable under the Canadian Forces Superannuation Act, the Public Service
Superannuation Act or the Employment Insurance Act;
b. benefits payable under the Canada Pension Plan or the Act respecting the Québec
Pension Plan, CQLR, c. R-9;
c. benefits payable under any employer- sponsored long-term disability insurance plan;
d. compensation payable in respect of economic loss under the Government Employees
Compensation Act or any provincial workers’ compensation legislation;
e. amounts payable in respect of economic loss arising from a legal liability to pay
damages;
f. benefits payable under an employer-sponsored pension plan;
g. employment income in excess of $20,000 earned in a calendar year;
h. benefits payable under Part I of the Royal Canadian Mounted Police Superannuation
Act; and
i. benefits payable under the Old Age Security Act.

A Veteran who is participating in VAC’s rehabilitation program will be evaluated before turning 65 or after the completion of the rehabilitation or vocational assistance program. If the permanent physical or mental health problem results in a Diminished Earnings Capacity (DEC) then the Benefit will be extended for the Veteran’s lifetime or until the Veteran no longer has a DEC. Consequently, this also means if they don't declare you DEC prior to the end of your Rehab/Voc training or at age 65,  it ends for good.

So in this instance, as the Veteran is not 65 (or applying for CPP early at 60) there is no benefit to CPPD unless you have children of school age or will not be declared DEC and think you will have a better chance with CPPD.

PFL Post-65

If you reach 65 and are declared DEC you get to continue IRB at 70% of the previous amount. Not 70% of your release salary but 70% of what you were receiving prior to turning 65. So if you turned 65 yesterday and were receiving the minimum IRB of $48,600 ($4,050 per month before taxes)  today you would now receive $34,020 ($2,835 per month before taxes) a drop of $1,215 per month. This amount is "Variable A" and then all the proscribed source deductions are applied. If anything is left of your IRB you get that. CPP, CPPD and OAS are deducted at 100%. Again any amount from those proscribed sources for Children or a deceased spouse are immune from deduction.

So it all comes down to this fact, if you don't have school age children at home (or in post-secondary education) there is no value in CPPD. Its a headache best avoided, unless SISIP forces you.

The argument that CPPD and potentially higher CPP earnings would be available if you lost your IRB as a reason to apply is one I find very challenging. To get IRB your "barrier to re-establishment" need not be permanent. If not considered permanent your IRB would end after your Rehab plan was completed or you were gainfully employed. If that was the case you don't qualify for CPPD anyway. If your condition was "permanent" then its the DEC route which pays a minimum of $48,600 while CPPD max is $16,029.96 and both have different criteria for acceptance but similar ability to remove the benefit. In fact, in the DEC policy it states as one of the reasons to review your DEC status is if SISIP or CPPD determines that you no longer meet "their" criteria for disabled. So if you think its a cushion and CPP or SISIP decides to review and they kick you off that program VAC will take away your IRB. Under IRB, if they decide to re-evaluate you prior to 65 you could lose your DEC but after 65 even if you lose your DEC they can't take away your IRB.

Overall, this program is for other Canadians who don't have VAC to turn to. Its a much smaller benefit and could expose you to more risk in that if you obtained CPPD and were determined later as not meeting the standard you would lose your IRB as well, an unintended consequence. The linkage is too tight. VAC has much more specific details about why and when they would reassess you when you have a DEC.

We do need a couple of Veterans who are over 65 and are having their CPP deducted from their post 65 IRB to initiate a class action as the CPP should not be deducted. It is funded totally by the taxpayer and the employer and the government contributes nothing to it. Also, it is mandatory that you contribute so you have no choice where the money goes. If you had taken the same money and invested it in RRSP's or some other investment it would not reduce your IRB. This would be an easy win and would offset the drop in IRB at 65. I'm not 65 or I'd do it myself.

45jim & Unknown Soldier,

I have a private LTD provider and I was contractually obligated to apply for CPPD. So I applied and was accepted. Each case is individual, but, in the end CPPD was/is appropriate for my situation.

I do agree if you are not forced to apply and your particular math clearly shows that you shouldn't apply then don't, but, please look at all the financial implications as it would affect you today and at 65.

Unknown Soldier is correct with respect to CPPD and higher CPP payments at 65 and as a financial cushion if for some reason IRB is cancelled (for an individual). Being on CPPD makes no difference with respect to OAS. OAS is independent from CPP. When you turn 65 you will receive the set amount of OAS which will reduce your IRB as OAS is an offset.
AirLog

45jim wrote:The PFL scheme has a ceiling for earnings, remember its a cost reduction scheme for VAC not an enhanced program to the benefit of Veterans. The numbers clearly show that PFL is 50% as costly to the Government as the Pension Act was. No Veteran should be looking to other Government agencies or programs to offload the responsibility for VAC for disability payments.

If you are receiving IRB there is no advantage to applying for another government program that will be deducted dollar for dollar from your current IRB benefit. Your IRB is topped out at 90% of your release earnings and reduces to 70% at 65. If you are DEC already I would imagine that the ability to earn $20K a year would trigger a re-evaluation of your DEC condition so unless proven otherwise your income is strictly IRB plus any benefit that is not an offset. If you apply for CPP at 65 (or anytime) it is deducted dollar for dollar from your IRB, so why even bother? Why apply for CPPD when it also is deducted dollar for dollar from your IRB? Why go through the hassle of worrying about paying back pension bridge benefits and IRB over payments?

Unless someone can show a financial benefit to the Veteran, no one should be assisting Veterans Affairs in passing the buck to another Government agency.

If you can receive a benefit under CPPD for children that is not an offset, well that's a good financial reason for the time until your children hit the cutoff age, other than that these benefits and the hassles that go with applying are of no benefit to the Veteran. The PFL was designed to ensure the earning ceiling isn't breached.

I’m not a good “ splainer” but I was told that if you end up on CPPD your OAS and or your CPP payments become higher at 65 because, the GOC stops calculating your yearly income that defines these payments, I.e. if you ended up on CPPD at 25 and only worked for 5 years up until that point your payment would be much higher than someone who ended up on CPPD at age 45 and prior to that had worked stead since they were 18. Also, the way VAC keeps changing and taking away things, yes, CPPD is deducted from IRB, but what if a vet somehow loses their IRB through cancelation and or suspension, they would at least have that CPPD money coming in.?

The PFL scheme has a ceiling for earnings, remember its a cost reduction scheme for VAC not an enhanced program to the benefit of Veterans. The numbers clearly show that PFL is 50% as costly to the Government as the Pension Act was. No Veteran should be looking to other Government agencies or programs to offload the responsibility for VAC for disability payments.

If you are receiving IRB there is no advantage to applying for another government program that will be deducted dollar for dollar from your current IRB benefit. Your IRB is topped out at 90% of your release earnings and reduces to 70% at 65. If you are DEC already I would imagine that the ability to earn $20K a year would trigger a re-evaluation of your DEC condition so unless proven otherwise your income is strictly IRB plus any benefit that is not an offset. If you apply for CPP at 65 (or anytime) it is deducted dollar for dollar from your IRB, so why even bother? Why apply for CPPD when it also is deducted dollar for dollar from your IRB? Why go through the hassle of worrying about paying back pension bridge benefits and IRB over payments?

Unless someone can show a financial benefit to the Veteran, no one should be assisting Veterans Affairs in passing the buck to another Government agency.

If you can receive a benefit under CPPD for children that is not an offset, well that's a good financial reason for the time until your children hit the cutoff age, other than that these benefits and the hassles that go with applying are of no benefit to the Veteran. The PFL was designed to ensure the earning ceiling isn't breached.

Paratrooper,

I am currently going thru the same issue you are going thru. I have recently been approved for CPPD benefits backdated 20 months. First thing that you do is advise your military pension that you have been approved for CPPD benefits and the date that it is effective. Call them. They are not very fast at adjusting your military pension.

They will adjust (downward) your military pension with the amount of your bridge benefit. In my case it is approximately $750. Everyone has a different amount. It is based on the amount of time severed and in your release documents your first pension letter would have identified this amount. Lets be very clear, your military pension will be reduced by your bridge benefit and you will have to pay back this bridge amount to the day that your CPPD benefits were approved.

You indicate that yours is retroactive to January 2016, so you will owe your military pension the bridge amount back to January 2016. Not to scare you (financially speaking), but the amount of bridge back pay to my military pension is approximately $11K. Don't worry too much about this as any amount owing to your military pension will be offset by an increase to you IRB.

Some of the examples below clearly indicate how this will all play out and how you will end up with approximately the same amount of monthly income after receipt of CPPD benefits as you did before receipt of CPPD benefits. The only way it would be less if you CPPD benefits are more than the bridge amount, as in my case, then your monthly amount will be less by the difference between CPPD benefits and your bridge amount. In my case it amounts to approximately $650 less per month (gross amount). This is because my bridge amount is $750 per month and my CPPD benefits is approximately $1,350 per month.

AirLog

Here we go again, I'm not sure where this Bridge Benefit deduction comes from but I've been going forth and back with finance at VAC and according to them, this Bridge Benefit does NOT apply toward my CPP Disability pension. Just to make sure it is clear before I get more confusing answers, I am receiving a military pension, my CPP Disability and my IRB. I was informed by VAC my CPP Disability is the same as my military pension and the full amount from my CPP Disability pension will be deducted from my IRB. My CPP Disability reimbursement is retroactive as of January 2016 for the full amount.

If I am in fact entitle to at least get the Bridge Benefit from my CPP Disability pension and VAC finance says otherwise, where can I go to confirm if I am in fact entitle to this Bridge Benefit from my CPP Disability pension???

Paratrooper

Example:
Receiving 5000 IRB 90%
Then you get:
CPPD          +$1400
              IRB= 3600
Then you apply the Bridge Benefit reduction assume its $500

$500=B/Benefit comes in effect / which decreases pension / causes IRB to increase  by $500  

Now you would receive $4100 from IRB, A reduced  Military pension   plus CPPD

Still equaling the same totals as you had prior to CPPD and benefit.

Just the source amounts of payment change.

The IRB is what keeps you at 90% until 65 years of age.

Very true Paratrooper, but, your pension will be reduced by the bridging amount and then your IRB will increase by this amount. Give a little take a little. In my case I will be down overall by about $500 per month as a result of CPPD benefits.

AirLog

For those who replied to my question concerning the policy with VAC when receiving a CPP Disability pension and the Income Replacement Benefit pension you should all note that I recently received a confirmation from VAC and if a Veteran is receiving a CPP Disability pension, the entire amount of his or her CPP Disability pension will be deducted from his Income Replacement Benefit. This deduction is retroactive.

KetchupKD wrote:Unknown Soldier
IRB-It is reduced dollar for dollar whenever you take it. IE: 2019 - $1000 CPP 2024- $1420-
So in 2019 it reduces your IRB by 1000/m so you wait until the max amount then its reduced by $1420/m I do not see any benefit in delaying.

No matter what your age after 65 to 115 years of age your IRB is only 70% Max. Other than the annual COLA your IRB remains fixed so any increases in offsets only decreases your IRB monthly amount.

Other than "non offset" amounts discussed previously nothing can improve on monthly income unless you return to work and then your allow to make $20000 without any reduction. I would be careful with that one someone with all the benefits and DEC etc etc may have his case reviewed for entitlement.

well I'm not 65 yet, so this is a back burner issue for me, assuming whoever takes power doesnt revamp all the vet benefits again, I'd like to see cias come back for instance