Column

DENYING A 91-YEAR-OLD

Ottawa simply says ‘No’ when asked to make some retroactive CPP payments

MARY JANIGAN May 19 2003
Column

DENYING A 91-YEAR-OLD

Ottawa simply says ‘No’ when asked to make some retroactive CPP payments

MARY JANIGAN May 19 2003

DENYING A 91-YEAR-OLD

Ottawa simply says ‘No’ when asked to make some retroactive CPP payments

Column

MARY JANIGAN

THE FEDERAL FORM arrived in October, 1999—more than 13 years after James Conn died. To his widow Isabel’s consternation, it explained that he was eligible for a small monthly payment from the Canada Pension Plan because he had contributed for three years in the late 1960s. She toddled off to her Vancouver area seniors’ centre to ask what on earth Ottawa was talking about. She did not realize her husband had contributed to the plan after its inception in 1966. But she knew for sure he had never received a penny before his death in 1986. It turned out she had been eligible for CPP survivor benefits since that date.

But Ottawa has a rule: it will only go back 11 months when it makes retroactive CPP payments. So Conn’s chauffeur husband missed his tiny pension from 1970 until his death—and she lost survivor benefits from 1986 until that out-of-the-blue notice. Conn now collects about $100 a month from her husband’s CPP. “But when you are living on reduced income, that is a lot of money,” she says. She would use any retroactive payments to enter a retirement home or foster her great-great-nephews’ education. “The government wrote him a letter after he had been dead for 15 years to see why he had not collected his pension,” adds an exasperated Conn, now 91. “If they were smart enough to write after 15 years, they should be able to go back 17 years and pay me what I am entitled. Government does stupid things.”

Actually, there was method in Ottawa’s apparent madness when it designed its retroactivity rules in the mid-1960s: it did not want crafty seniors to pocket federal payments like the Guaranteed Income Supplement (GIS) for the low-income elderly— and then turn around, years later, and apply for their CPP plus interest in a tidy lump sum. After all, those seniors might not have been eligible for low-income programs if they had been collecting their CPP. So, to close the door to possible abuse and to relieve strain on the program itself, Ottawa selected an across-the-board method that was

most convenient for its bureaucracy. That was then. Today, there is certainly a better way in this computerized age to handle seniors like Conn who have lost thousands of dollars in back payments, simply because they did not know they were eligible.

It has become a fascinating, if occasionally heated, behind-the-scenes policy debate. Ottawa says “No.” Resolutely. It only pays more than 11 retroactive monthly payments when it makes an administrative error. And it warns that any changes to that rule would likely require new legislationplus the consent of its nine provincial partners in the plan. (Quebec has its own pension plan.) The cost, it adds, could also increase every working person’s premiums.

An unlikely crusader named Richard Shillington says “Yes.” And he has dedicat-

THERE IS NOT yet the political will to fix this,’ says consultant Richard Shillington, ‘even though it is the right thing to do’

ed a good chunk of his day, without pay, for more than two years to changing the rule. An Ottawa-area social policy consultant and statistician, Shillington, 53, first noticed that many seniors were not collecting their pensions in late 2000. At the time, for eight weeks, he was working with needy people at a Toronto community group. Back in Ottawa, still bothered by those retroactivity rules, he peppered the human resources department with freedom of information requests on delayed payments to the elderly.

So far, he has learned that, by May 1999, there were 20,924 Canadians who applied after the age of 70 for their CPP. (Recipients can opt to apply as early as 60 and as late as 70—but the monthly amounts are higher if the applicants are older.) Roughly 75 per cent of the late applicants were women—and

half lived in Ontario. By that same date, there were more than 14,000 late applicants for survivor benefits. The retroactivity rule applies to all federal old-age payments. But CPP is a program that is not funded out of taxpayers’ pockets: in 1998, contributions were increased to cover current and future obligations such as the baby boomers’ retirement. The program is now sound. “This is their own money,” argues Shillington. “The amount of the pension is based on their own contributions. But there is not yet the political will to fix this—even though it is the right thing to do.”

Shillington is determined. He is collecting individual’s stories—and he has found a lawyer prepared to go to court on their behalf. Graham Webb, from Toronto’s Advocacy Centre for the Elderly, will likely base his case on claims that Ottawa has breached its duty of trust to those contributors—and that its rules are unfair and arbitrary. “This is something that is overdue,” Webb says.

So how should Ottawa respond? In 1999, it tried to find eligible people who have not applied: it sent reminders to 56,000 elderly; 12,000 applied as a result. But that does not deal with retroactivity. At the very least, Ottawa could issue back payments—minus interest—which would be taxable in the year it is paid. Or, although this would be tricky, it could deduct its past payments under other programs from the retroactive cheque. It could, for example, deduct previous GIS payments from any CPP retroactive cheque. True, this is complicated: GIS is not taxable—and CPP is taxable. “But that does not let them off the hook for paying what they owe,” says Shillington firmly.

In the meantime, Saul Mansour of New Glasgow, N.S., can only wait. He was badly injured—and his wife Eileen died—in a 1978 car accident. Reeling with grief, struggling to raise three young children, he did not find out about survivor benefits until he applied for his old-age pension in 1996. When he appealed the retroactivity ruling, the tribunal decided against him, arguing, according to Mansour, that the funeral director should have told him. Now 72, he would give the money to the Salvation Army. “Iam back on my feet now, but I sure could have used it then,” Mansour says. “The experience with CPP was horrible. It was larceny.” And it should be remedied. Iffl

Mary Janigan’s column appears every other issue, mjanigan@macleans.ca