Canadian Pension Plan Disability is Failing Many of the Most Vulnerable Canadians

It is a disgrace that many Canadians, with long-lasting and severe disabilities, have to wait for years to see if they can get CPPD benefits.

Working Canadians, even the self-employed, contribute to the Canadian Pension Plan (CPP) our national public pension plan. The Canada Pension Plan Disability (CPPD) is the largest long-term disability insurance program in Canada under the CPP.

For Canadians who contributed to the CPP during their working years, qualifying for CPPD is very difficult due to the requirements of “severe and prolonged disability” – an ongoing issue.  Canadians who paid into the CPP are entitled to benefits when they need it most.

Requirement to qualify for CPPD:

Severe means that you have a mental or physical disability that regularly stops you from doing any type of substantially gainful work. Prolonged means your disability is likely to be long-term and last indefinitely or is likely to result in death.

Source: Canada Pension Plan

Among CPPD applicants are Canadians who have terminal illnesses such as stage III or IV cancer, and with grave conditions such as Alzheimer’s, Parkinson’s and paranoid schizophrenia.

On February 2, 2016, the Auditor General of Canada reported on the CPPD program and found that:

• More than one-half of Canadians who initially applied for CPPD benefits were denied. In the 2014-15 fiscal year, 69,075 Canadians applied to the Employment and Social Development Canada (ESDC) for CPPD benefits and 39,707 or 57% were denied.
• Of the Canadians denied CPPD benefits, 13,159 applied for reconsideration by ESDC of which 4,661 or 35% were approved even though they were initially denied.
• Canadians who were denied in the reconsideration have two more levels of appeal through the Social Security Tribunal (SST) that was set up by the last government. The SST was supposed to improve the system but instead it did the opposite. On April 1, 2013, when the SST was started, 6,585 backlogged appeals were transferred over from the previous system. By December 31, 2014, this backlog had increased to 10,871 appeals.
• One in three Canadians who filed appeals to the SST in fact qualified for the CPPD benefits even though they were denied twice.
• Only 7% of terminally ill applicants had a decision within 48 hours in 2015, a drop from 11% in 2013.
• Canadians with appeals had to wait on average for almost 2.5 years or more than twice as long to get a decision under the SST than the previous system.

Applying for CPPD takes tenacity as applicants have to complete an application kit with 8 documents totaling 42 pages.  This is unreasonable considering applicants live with severe and prolonged disabilities.

Thousands of applicants who qualified for the CPPD were denied in the initial and the reconsideration stages – far, far too many!  Had these Canadians been approved when they first applied, then only 36% not 57% of applicants would have been denied.  The denial rate is likely even lower as many applicants who were initially denied do not ask for reconsideration.

As it is, Canadians living with disabilities are two times more likely to live in poverty. The CPPD benefits are modest and is only a partial replacement for income. For 2015, the average monthly CPPD benefit is $928.08 and the maximum monthly amount is $1,264.59. The CPPD benefit is made up of a basic monthly amount for all recipients of $465.84, plus an amount based on their CPP contributions during their working years.

However, the CPPD benefits interact with workers compensation and private disability plans where the amount received from CPPD is deducted from the benefits from these other plans.

In 2011, the last CPPD evaluation found that on average, CPPD benefits made up half of a recipient’s income. And, unfortunately, CPPD benefits were the only income for 12% of recipients.

Canadians who have exhausted all options to qualify for CPPD, often have to turn to social assistance for help as a last resort.

The long list of flaws in the CPPD program penalizes Canadians who are already vulnerable and need to draw on the national public long-term disability program. The CPPD is not a government income support program funded through taxes but a national public long-term disability program funded through employer and worker contributions. Only Canadians who have contributed to CPP can apply for CPPD benefits. The CPPD program needs to be fixed – many Canadians deserve better than what we have now.