Institutional links

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

Conclusion

This paper has examined the origins and evolution of the CPP, with a focus on the disability program, over the past four decades. We have been interested in tracing how the issue of public protection against the disability of workers has been addressed, and what the reform record has been of the federal government. A central part of Canada's social security system, the CPP has been described over the years as an important symbol of our nationhood, a major achievement in cooperative federalism and a significant component of our social fabric.

A general framework for the analysis of this history based on four periods was presented and used: 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, 1994 to 2001, a period characterized by critiques, retrenchment and the reorientation of disability benefits and goals. It was suggested that the four periods have distinct enough attributes to permit a separate analysis of each. Nonetheless, it is also recognized that the four periods are fundamentally interconnected. Contemporary CPP disability policy is therefore best seen as informed by the interplay of these periods of policy changes and continuities.

As social policy analysis, the paper has delved into the reasons Canadian governments introduced, expanded, constrained and restructured the CPP over the past 40 years. The analysis has put emphasis on political factors, concentrating on governments, political parties, federalism and legislative processes. In sum, the study suggests that the genesis of the CPP disability program was shaped by electoral strategies, policy work by Liberal Party and federal and Quebec bureaucratic officials, intergovernmental bargaining and constitutional considerations, wide public support, and social security practices in other countries.

A number of American influences can be noted. The addition in 1957 of disability insurance to the United States' Social Security, a national contributory pension scheme, contributed to the interest and debate in Canada. In 1958, the Diefenbaker commissioned a comparative study of the Canadian and American systems in retirement pensions and disability and survivor benefits. When the CPP was being designed in detail in 1964, federal government officials found that Canadian statistics related to long-term disability and the experience under the Disabled Persons Act, "disclosed little information that seemed directly pertinent to possible future experience under the CPP. Thus, for purposes of the current estimates, disability rates were based almost wholly on disability experience that has developed under the Old Age Security Disability Insurance system of the United States" (National Health and Welfare, 1965: 78). As noted earlier, the appeal system included in the original Canada Pension Plan legislation was modelled somewhat along the lines of the American old age security legislation, along with experience of comparable Canadian social programs. In the politics of marketing the CPP proposal, the American example was convenient and familiar to many Canadians, perhaps helping to allay the concerns of fiscal conservatives within the federal bureaucracy, parliament and pension industry.

Once implemented the CPP developed a trajectory of its own - with its financing and lending policy, growing caseloads and appeals, program changes and policy debates -subject to the influences of Canada's political economy, practices of the QPP, federalism and cabinet parliamentary government. In the other direction, the CPP disability program has affected the policy context too, and Table 15 suggests some political implications of the disability program.

Table 15
Policy and Po litical Effects of the CPP Disability Program

Feature	Effects
Disability Expenditures	After liberalization of benefits and eligibility in late 1980s and early 1990s, concerns by officials about excessive cost pressure and thus framing a reform agenda calling for the restraint in growing expenditures
CPP Appeals System	From the outset, disability cases comprise about 95 percent of all appeals Over time, pressure on expanding or tightening the interpretation of eligibility and disability Eventually lead to reforms of second level in 1992 Various groups appear before tribunals providing advocacy services (e.g., lawyers in private practice or with legal aid clinics, professional pension consultants, union representatives, and community support workers)
Role of MPs and Parliament	Constituency concerns prompt regular questions and motions by MPs The universality of disability conditions across the country and the well- deserving status of disabled workers tend to make this a non-partisan issue with co-operation among parties Reforms to the CPP a frequent topic of private members' bills Committees and task forces important forums for policy evaluation, consultation and reform advocacy Office of the Auditor General of Canada also a regular actor involved in policy and program assessment
Liberal Party of Canada	CPP and the disability component presented as a major achievement and legacy of the Pearson era, something to protect and strengthen
Federal-Provincial Relations	Disability benefits required a constitutional amendment in 1964 Major changes call for broad intergovernmental consensus, granting de facto vetoes to Quebec and Ontario because of population sizes Quebec Pension Plan often presents a source of innovation Working groups of officials frequently used to negotiate and to study reform proposals
Provincial Disability and other Income Programs	Issues of cost-shifting between levels of government, and benefit stacking by some clients Some harmonization between various public income programs, such as the development of information-sharing agreements to work together with federal income program and agencies Idea of a comprehensive disability income program raised periodically and examined by officials
Private Life and Health Insurance Industry	Private insurers in Canada administer their insurance programs in relation to the CPP disability program as the "first payer" of benefits Private insurers often require claimants to first apply for, and appeal decisions regarding their eligibility for CPP d isability benefits This can result in claimants experiencing delays in obtaining benefits and in limiting the level of benefits payable to claimants, thus limiting the overall payout by private insurers
Social Union	A social insurance program with national coverage which enhances the role and responsibility of the federal government in the pension and disability policy fields Includes provisions for review, joint planning, sustainable funding and for informing Canadians Seen by most Canadians as an essential element of social security and citizenship

One of the themes of the paper is that CPP disability policy is best understood in broad terms. CPP disability policy includes not only legislation and regulations, but also agreements on social security and information-sharing, policy directives and medical guidelines, leading case decisions on appeals, management practices and communication initiatives. Furthermore, analysis must not be limited to the policy goal of income protection. From the start, other policy goals have been a feature of the Plan, and these have risen as priority concerns by governments.

A key finding is that the goals of return to work, program integrity, and financial sustainability all received greater emphasis through the 1980s and 1990s while the income security goal has been the object of some restraint in the most recent period. Each of these policy goals also has its own meaning, which may have shifted somewhat over time. Income support has had a social insurance purpose to replace earnings lost, rather than an anti-poverty purpose of providing a guaranteed basic income to all. Program integrity, for example, has expanded beyond initial ideas about rights to an appeals process, to include control measures, client services and communication efforts.

Continuities Spanning the Periods

Underlying the four periods of the CPP disability program's history is a large element of continuity in policy, practice and politics. Major examples of this continuity include the following:

• The CPP remains a national social insurance program operating in nine provinces and the territories alongside the Quebec Plan.
• The original goal of a modest level of income replacement, with a defined benefit that is indexed, taxable and portable, continues.
• The maximum CPP and QPP retirement pensions are still limited to 25 percent of average earnings in order to leave plenty of room for occupational pensions and personal retirement savings plans.
• The statutory definition of eligibility to the disability benefit has always included reference to a prolonged and severe mental or physical disability.
• The right to appeal decisions affecting CPP benefits, which may be launched by the applicant or beneficiary, an advocate, trustee, an estate or the Minister.
• Disability cases representing approximately 95 percent of appeals since the early 1970s, reflecting in part the growing caseloads until the mid 1990s.
• The steady negotiation of international social security agreements, dealing with the Old Age Security and CPP benefits, since the later 1970s, with over 40 agreements now in force (HRDC, 2002c).
• The periodic examination by governmental officials of establishing a comprehensive disability income plan but with no firm action taken.

Indeed, most of the original design features of the CPP outlined in Table 2 are in effect today. A number of reasons can be suggested for these continuities and why changes are often slow or difficult to achieve. These would certainly include a faith in the private sector and a belief in personal responsibility to provide retirement income security, joined with a concern held by many of the financial costs and sustainability of public pension reforms. Then there is the reality that the disability program is one part of a larger program, the CPP retirement pension, which in turn is one component of a complex system of public and private sector pension and disability programs. Since the CPP is an intergovernmental program, a federalized contract, it is both a valuable source of stability and an impediment to quick and easy change. A reason commonly noted by political scientists and social policy analysts is that the amending formula for major changes to the CPP requires the approval of parliament and of two-thirds of the provinces with at least two-thirds of the Canadian population. This adds a strong degree of "dynamic conservatism" to the CPP (Banting, 1987) as does the wish to maintain congruency between the CPP and the QPP.

As a social contract, the CPP is a response to key public needs, the product of hard governmental bargaining and hot parliamentary debate (LaMarsh, 1969; Kent, 1988) and constituting a complex web of obligations, entitlements and expectations. In part, the various continuities in the CPP represent an honouring of these past commitments. At the same, though, another continuity is that ideas about and demands for reforming the CPP have never been far from the policy agenda for most of the past four decades.

Changes in Disability Policy and Practice

While continuities are apparent in CPP policy, the plan has not been completely resistant to adjustments and transformations. To a large extent, change has been a normal state of affairs for CPP disability policy and practice. The nature and content of policy changes, legislative amendments and administrative developments were set out in Tables 4, 7, 9, 13 and 14 covering the four periods of the Plan's history so far. I draw concluding attention to them to make the basic point that the CPP has changed many times and in many ways; a simple count of those surveyed in this paper amounts to around 50 changes in policy and practice.

Noteworthy changes in the CPP and the CPP disability program, and their dates, have included:

• The amount of benefits payable to disabled contributors and to children (1978, 1987, 1992)
• The method of indexation (1974)
• Elimination of the retirement or earnings test for retirement pensions (1974)
• Contributory requirements for disability (1969, 1975, 1980, 1987, 1998)
• International Social Security Agreements (starting in 1979)
• The contribution rates schedule (1987, 1992, 1998)
• The review of program performance by Finance Ministers on a five year cycle (established in 1987) later changed to a three year interval (1998)
• From pay-as-you-go financing to partial funding (1998)
• The department's organizational structure and delivery systems for services (various times)
• The shift from Review Committees to Review Tribunals at the second level of appeals (1992)
• Interpretations of what constitutes a severe and prolonged disability (1988, 1992, 1995, 2001)
• Introduction of the CPP Disability Vocational Rehabilitation Program (1997)
• The abolition of the CPP Advisory Committee (1998)
• The creation of the CPP Investment Board (1998)
• Adoption of an earnings exemption for disability beneficiaries (2001).

These changes were accomplished through legislative amendments, new legislation, administrative guidelines and policy directives within the department, and though accords between the federal government and other governments. Other changes reflect shifts in the economy and society, such as the decline in the age of CPP disability beneficiaries over time and the shift in the gender mix of beneficiaries, with a growing presence of women on the caseloads (Torjman, 2002). Pressure for changes has come from claimants and their families, in their struggles with the department and the appeals system; from MPs in advocating on behalf of constituents and their own political beliefs; and from the federal Department of Finance, wanting to control costs.⁵⁹

Pressure for change has come also from various social policy groups representing women, persons with disabilities, and older workers. With an increase in divorces, shifts in family sizes and forms, the growing labour participation of women, people retiring earlier than age 65 and other trends in social attitudes, the assumptions embedded in the program from the 1960s and earlier, became less conventional and reflective of the human tapestries of Canadian experience. Official discourse on disability issues - the language used by decision makers in talking about public policy actions - has also shifted somewhat in recent decades. The language commonly employed in documents in the 1980s spoke of "helping the disabled". More recent documents speak of offering support to Canadians with disabilities to support them in achieving equal citizenship (Prince, 2001a; 2001b).

A question which has received different answers over the years is: how many years of paid work and making contributions over what period of time are required to qualify for the disability benefit? Table 16 summarizes the different responses by governments to this question.

Table 16
Changes in Contributory Requirements for CPP Disability Benefits

Timeframe	Minimum Contributory Period to Establish Eligibility
October 1969 - September 1975	Five full years of contributions
October 1975-September 1980	Five of the last 10 years in whole or in part calendar years
October 1980 - December 1986	One-third of the total years in their Contributory Period of which 5 of last 10 years
January 1987 - December 1997	Five of the last 10 years OR Five years if less than 10 years in Contributory Period OR Two of the last three years OR Two years of only two years in Contributory Period
January 1998 - Present	Four of the last six years OR Four years if less than six years in Contributory Period OR For each year after the month of cessation of the previous disability benefit

In just over 30 years, the CPP disability program has gone through four phases of reform. While a particular reform process, represented say by a major piece of legislation, may start and stop, pension policy development is never finished and the pension system never totally completed. "Policies rarely take the precise form of the demands which gave rise to them. The demand is often that "something" be done; the policy is only one of several possible some things. For many it may satisfy the original want only in part, and for both them and theirs it may give rise to new wants by raising expectations" (Bryden, 1974: 16). With disagreements over definitions of severe and prolonged disability, shifting priorities on policy goals, time constraints and other resource limitations, policy and practice reforms are never precisely on target. And, let us always remember, pension policy reform is inherently a political process. ⁶⁰ The continued, serious inadequacies of pension coverage in the private sector of Canada's work force served, at times, as a stimulus for calls of further action in public pension, though increasingly such calls were ignored or resisted by most governments in the last decade.

In the 1980s, political assessments of the CPP concluded that while major change was possible it was not easy, given the need to secure the support of Ottawa, Quebec, Ontario and five other provinces. With shared and divided authority over the CPP, a broad intergovernmental consensus was required under the decision rules, consequently making it a conservative force in Canadian pension policy (Banting, 1984; 1987). This became the conventional view of the CPP in the social policy and Canadian federalism literatures.

This pessimistic view of the possibility for changing the CPP also reflected the at best modest results from the Great Canadian Pension Debate and the National Pensions Conference in this period.

Since the writings of the mid 1980s, the analysis presented here clearly shows that the CPP has undergone significant reforms, both expansions and contractions. Intergovernmental agreements have been reached on different occasions dealing with several issues, as outlined throughout this paper. The regular schedule of federal-provincial meetings of ministers every five years, instituted in 1987, and now every three years, since the 1998 reforms, facilitates this dialogue among governments, especially among finance and treasury officials. Actuarial reports since the 1997-98 reforms continue to project that the CPP contribution and funding structure are sustainable without amendment. Rate increases will cease with the 2003 rate increase, barring any serious adverse experience. The Investment Board anticipates a growing pool of assets from equity investments in the coming decades. As times goes by, it may be that the social policy aspects of the program will be less overshadowed by financial issues. Thus, the CPP emerges as a dynamic program, experiencing numerous changes over the past four decades, and likely to continue doing so in the years ahead.

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59 The abolition of the CPP Advisory Committee in 1998, for example, was not publicly discussed in the 1996 consultations and was not particularly an issue for the provinces. The Advisory Council was not liked by Finance officials, who commo nly viewed the Council as a source of expansionary pressures on CPP program spending. The official rationale within the federal bureaucracy for killing-off the Advisory Council was that it was no longer needed given the three year cycle of review of the CPP by governments and that similar boards had been eliminated by recent federal governments as part of the restraint drive. With the change in financing the CPP and the creation of the Investment Board in 1998, it seems clear that the federal government, along with the provinces, wanted to do business differently with respect to the governance of the CPP.

60 John Myles and Jill Quadagno (1997: 249) remind us that: "Pension reform is the result of a political process in which contending actors vie with each other to promote or to resist change or to determine the form and amount of change."