Institutional links

Wrestling With the Poor Cousin: Canada Pension Plan Disability Policy and Practice, 1964 - 2001

Introduction

"One of the most important policy initiatives ever undertaken in Canada was the decision over three decades ago to establish the Canada Pension Plan. The CPP is about our values as a nation. It is about the sharing of risk and the security of benefits."

"The principle intended to be followed under the provisions of the pension plan is that the individual who is either a contributor or a dependant should not be unnecessarily burdened. After all, the whole idea of a pension plan is to provide benefits rather than creating costs."

With the passage of the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) in 1965, income support for workers who experience a severe and prolonged disability became a national objective and responsibility by governments. In the subsequent 35 years, the CPP disability program has become a major feature of Canadian social policy for persons with disabilities and their families. In fact, the CPP disability program is the largest long-term disability income program in Canada, offering coverage regardless of the cause of the disability and providing more than $2.8 billion in benefits; benefits which are portable across the country and fully indexed to inflation. Yet, paradoxically, the CPP disability program does not figure prominently in political and policy debates, has low visibility in media coverage and, it seems, is not well understood by the general public.

Purposes and Scope

This report has three purposes. The first is to identify the major periods of policy and legislative change in CPP disability over its history, and to assess the nature and importance of political variables on these changes. The second is to critically analyse and evaluate, from the perspective of the applicant for CPP benefits, the implications of these changes, in particular the latest set of reforms. A third purpose is to raise awareness and enhance understanding of this vital program in Canada's social union.

The focus of the analysis is on the disability component of the CPP, rather than the CPP retirement pension and its other aspects more generally. The time frame covers the 1964 to 2001 period, which spans the origins of the program design and intergovernmental agreement to the CPP, through to the most recent set of policy reforms to the CPP and the disability benefits introduced since 1998. The history of the CPP provides important insight for understanding Canada's policy response to the income, rehabilitation, and employment needs of persons with disabilities. As a policy analysis, the paper considers the historical context and subsequent developments in disability policy; the policy goals and program details of the CPP disability; the general political and ideological context of Canadian society, Parliament and federalism; as well as the implications for applicants and clients.

Themes and Arguments

The CPP symbolizes the ambiguous position of persons with disabilities, and of disability, in Canadian society and social policy. Several themes and arguments are suggested by the main title of this paper, "Wrestling with the Poor Cousin." On a number of levels, the CPP disability program is the poor cousin to the retirement pension program and the wider pension policy field, struggling to manage a difficult and large caseload, and a complex system of appeals. The legislation itself is called the Canada Pension Plan, rather than the Canada Pension and Disability Plan. The CPP disability pension is a supplementary component within this retirement income program, yet has become the largest disability income program in the country. One of the principles for reforming CPP in 1997-98 was that disability benefits must be designed and operated "in a way that does not jeopardize the security of retirement pensions" (Finance Canada, 1997: 119). In 1999-2000, disability benefits represented 9.5 per cent of CPP benefits paid and 14.9 per cent of the total benefit dollars paid out by the CPP that year.

A right to benefits is established through making contributions and having an attachment to the work force; however since the introduction of the disability program in 1970, most appeals to the responsible Minister and department have dealt with denial of disability benefit applications. In a sense, the modestly resourced Office of the Commissioner of Review Tribunals (OCRT), which handles second-level appeals, is the poor cousin to the comparatively massive Human Resources Development Canada which oversees the management of the CPP and handles the first-level of appeals. Even more so, individuals dissatisfied with the initial denial of an application for CPP benefits are the "poor cousin" wrestling with HRDC, and possibly the OCRT and Pension Appeals Board.

The poor cousin status of the disability program is also evident politically, programmatically, and academically. In comparison to recipients of Old Age Security benefits, retirement pensions or veterans' pensions, the beneficiaries of CPP disability benefits are not a real or perceived powerful political constituency (Banting and Boadway, 1997; Prince, 1992, 1997). One problem of note is that the disabled community served by the CPP is not the visibly disabled community perceived by the public and represented by organized groups. The CPP's beneficiaries largely are persons who are suffering from various degenerative diseases often associated with the aging process such as arthritic and cardiovascular conditions.¹

CPP disability, unlike CPP itself, entered into a policy field that was much more incomplete. There was a system of private and public pensions and RRSPs in place when CPP arrived, and it was made more complete by the introduction of the Guaranteed Income Supplement (GIS) in 1966. CPP disability links with group insurance and some aspects of workers compensation and welfare, but the 'disability income system' was much more spotty. There was thinking among policy makers in Canada to make CPP disability serve an analogous role to CPP/OAS in the retirement system; that is evident in the presence and later build-up of the flat-rate component. Yet the arrival of the GIS had no parallel in federal disability income policy, and in the absence of a group plan there is no practical way to build on CPP protection as one can with retirement savings.

In governmental reports and the academic literature on public pension policy, the CPP disability benefit has tended to receive only marginal attention, even in periods of great pension debates (e.g., Bryden, 1974; Deaton, 1989; Guest, 1998). Yet, as the following analysis will show, private insurers and provinces regard the CPP disability program as the "rich federal cousin." Most private insurance companies routinely, and some provincial governments increasingly over the past decade, use the CPP as the "first payer" of benefits to many Canadians with disabilities, therefore directing claimants to this program before processing their applications for benefits from workers' compensation, social assistance or private health insurance plans. In the early years of the 21st century, the CPP disability program operates within a complex and dynamic network of federal, federal-provincial, and public-private program relationships.

Outline of the Paper

To facilitate an understanding of disability policy change, the paper is structured around a framework which casts the evolution of disability policy as occurring in four periods: the policy design and formation phase from 1964 to 1970; the policy implementation, adaptation and pension debate phase spanning the 1970 to 1986 period; the years 1987 to 1993, which included major reforms to the CPP and the liberalization of disability benefits and eligibility; and the most recent phase, 1993 to 2001, a period characterized by critiques, retrenchment and the reorientation of disability benefits and goals.

The rest of the paper is organized in six main parts. The first part presents the analytical methods and key concepts used in conducting the research and policy study. The second part discusses the policy and political origins of the CPP and the disability component in the 1964 to 1970 period. The third part, which covers the years 1970 to 1986, describes the implementation of the CPP disability program, noting the various legislative and policy adaptations made, and offers an overview of the proposals, made during the "Great Pension Debate" of the late 1970s and early 1980s, for reforming the disability program. The fourth part looks at the major reforms to the CPP, including the liberalization of disability benefits and administration, and the introduction of a new appeals system, in the 1987 -1993 period. The fifth part examines the current period in the history of the CPP, a period characterized by critiques, some program retrenchments and a modest reorientation of the program's goals. In the sixth part, the paper concludes with general observations on the program's changes and continuities, as well as challenges and implications for clients.

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1 Interview.