Institutional links

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

Analytical Methods and Key Concepts

The paper employs several research methods: a scan of the academic literature on the CPP and related social policies in Canada; a review of government documents on the CPP, especially on the disability benefit; selected interviews with officials; and an analysis of administrative data regarding trends in expenditures, caseloads, decisions and appeals related to CPP disability benefits. The overall approach is a decision-making analysis and study of the public policy process. Key concepts underpinning and informing the analysis of the paper include disability policy, policy goals, program elements, and periods of policy evolution.

Disability Policy

Broadly conceived, public policy includes an array of authoritative actions that guide the direction of government in pursuing certain goals. Viewed this way CPP disability policy encompasses the following authoritative actions: legislation (the most obvious example being the Canada Pension Plan Act and Regulations); intergovernmental, inter-sector and international agreements on social security; policy directives that interpret and direct the implementation of the legislation; guidelines, for example to physicians and other medical practitioners inside and outside government; case decisions by Human Resources Development Canada (HRDC) on approvals and denials; leading decisions on appeals by the Pension Appeals Board, the Federal Court of Canada and the Supreme Court of Canada in CPP cases appealed beyond the level of Review Tribunals; ² management protocols and "best practices" such as for hearing processes; and, communications initiatives that include program guides and personalized annual statements of contributions to the CPP.

Policy Goals and Perspectives

Along with being an authoritative mechanism for allocating benefits and rehabilitation services, the CPP disability program is an expression of public purposes and certain deep-rooted values. An original and still primary policy goal of CPP disability is:

(1) Providing a degree of income protection or financial security, that complements private insurance, personal savings and employment benefit programs, by replacing a portion of the earnings of contributors who cannot work because of a severe and prolonged mental or physical disability.

Other policy goals of CPP disability, not necessarily in order of priority, are:

(2) Promoting a return to work by supporting at least some CPP disability beneficiaries to undertake gainful employment. This goal may now be seen as an "all win" concept. At the outset, however, the rehabilitation provision was coercive in nature - a power to require entry in rehabilitation and if the client refused, their benefit could be cut off. This is probably why this feature of CPP disability was not taken up by officials for many years.

(3) Ensuring program integrity and accountability so that benefits are paid correctly, appeals heard fairly and promptly, and fraud and errors are avoided.

(4) Providing or, at times, restoring the financial sustainability and affordability of the CPP for present and future generations.

Corresponding with each of these goals is a perspective on what the role and nature of the program should, and needs to, be in practice. Thus, matching the income protection goal is a perspective on entitlement; with the return to work goal an accent on enabling and active programming; with program integrity a value emphasis on compliance and enforcement; and with the goal of financial sustainability and affordability, a standpoint that draws attention to actuarial concerns, economic capacity and the equity of contribution obligations across generations of Canadian workers.

A recurring theme in the evolution of the CPP disability program has been an interaction among the four goals and perspectives. In every period of the program's history, these goals and their associated perspectives have had their champions and critics, and all four sets of ideas have been influential in shaping the CPP. The goals of return to work, program integrity, and financial sustainability have received relatively greater emphasis in recent years than they did in earlier periods in the CPP disability program's history. At the same time, the income protection goal has been subject to some restraints to slow down the rate of growth in program spending.

Program Elements

The CPP Disability Program consists of six elements. One is the disability pension to eligible contributors. In 1999-2000, $2.6 billion was paid to 287,000 contributors. A second is the disability benefit to the children of contributors. It has its own eligibility rules and benefit rate, and in 1999-2000 $245 million was paid in benefits to 97,000 children. Third, there is a national vocational rehabilitation program and other related return-to-work support services and incentives. A fourth element is the decision-making process on applications and the three-stage appeal system for administering and adjudicating benefit claims. Fifth, there is quality assurance and related monitoring and evaluation activities related to the goal of program integrity. Sixth, there is a set of agreements between the CPP and the Quebec Pension Plan to manage the flow of work between the plans and to handle legislative changes. As well there is a series of 14 information-sharing agreements with provincial governments and five such agreements with provincial workers' compensation boards along with 40 "reimbursement agreements" with private sector insurers. Canada also has international social security agreements with over 40 other countries. The relationship between the policy goals, value perspectives and program elements is shown in Table 1.

Table 1
Policy Goals, Perspectives and Program Elements of the CPP Disability

Policy Goals	Value Perspectives	Program Elements
Income Protection	Entitlement: individuals who pay premiums establish an entitlement to income support in the event of disability	Disability pensions Disability benefits for children International social security agreements Reimbursement agreements
Return to Work	Enabling: assist and encourage those able and willing to work to return to the paid labour force	CPP disability vocational rehabilitation program Related assessment and support services Work incentives such as the employment earnings exemption
Program Integrity and Accountability	Enforcement: through control and compliance mechanisms ensure that benefits are paid to the right people, at the right time and in the right amounts	Quality assurance program and internal audits Information-sharing agreements with provinces and WCBs Initial applications for CPP disability benefits and reconsiderations by HRDC, and the Review Tribunal and Pension Appeals Board processes
Financial Sustainability and Affordability	Economy: conscious of program costs and financing in short term and across generations	Contribution rate increases CPP fund investment practices Eligibility for disability benefits and their administration Information-sharing and reimbursement agreements

Periods of CPP Disability Policy Evolution

A core aim of this paper is to identify the major periods of policy and legislative change in CPP disability pension program over its history. Attention to the history of the CPP and the CPP disability is not merely to offer some general background, but is central to documenting and understanding the phases through which the CPP has passed and the nature of the debates, decisions and developments.

To understand where we are now, and explore where we might be heading, we need to know where we have been and why. The current CPP disability program is a product of the past and a promise for the future. It has been the object of reform as well as restraint pressures and decisions. Looking at the past informs us as to what policy and program options were set aside and how and why programs were formulated the way they were. Looking at history also reminds us of the power of the past in public policy. Past choices in program design and decision processes inform and guide apparent choices and constraints before governments today and tomorrow.

The evolution of CPP disability policy, as noted above, can be divided into four major historical periods. These periods are not exact and watertight eras; they overlap and interact in various ways. Yet, there are basic internal attributes which give each a relatively distinctive image and set of dynamics. The four periods of CPP disability policy development are:

• 1964-1970: policy design and formation. Constitutional amendment, intergovernmental negotiations and support, and federal CPP legislation. Administrative preparation and phasing-in of CPP contributions, and retirement, survivor and disability benefits.
• 1970-1986: implementation, adaptation and reform proposals. Disability benefits were first paid in the 1970-71 fiscal year. Contribution requirements for disability pension and children's benefits eased slightly.
• 1987-1993: major reforms to the CPP. Reforms include liberalization of disability eligibility requirements and a substantial increase in disability benefits.
• 1994-2001: critique, retrenchment and reorientation of CPP Disability. Benefit changes and stricter eligibility for disability pensions.

These periods of policy change are based on legislative, regulatory and administrative reforms related to the disability component of the CPP.³ For each of these periods, the following questions will be addressed. What is the scope of CPP disability policy? That is, what authoritative actions and program elements are in place, and how are policy goals defined and emphasized? What are the salient changes, if any, in legislation and program features, particularly in benefit levels and eligibility requirements for the disability programs? Who were the actors and organizations involved in making the policy and decision changes? What are the issues and trends regarding the CPP appeals system? What is the shape of disability benefit payments and caseloads? What other significant social policy and political developments were occurring that had implications for the CPP and disability policy? For example, was pension reform a high priority of government? In sum, what are the implications of the period for CPP disability applicants?

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2 Unlike the Pension Appeals Board (PAB), the Federal Court of Canada and the Supreme Court of Canada, the Review Tribunals do not make available their jurisprudence on CPP decisions because the Review Tribunals are not the final substantive appeal on CPP. On the evolving jurisprudence, the Legal Services Division of the OCRT has compiled a two volume "Book of Authorities" for Panel Members that refers to PAB, Federal Court of Canada and Supreme Court of Canada cases.

3 A focus on retirement pensions or survivors' pensions might yield a different number or characterization of historical phases, though the broad outline would likely be similar.