About the Action
What is the claim about?
Annual adjustment provisions under Part V of the Pension Act require that the basic pension amounts listed in Schedule I be adjusted annually based on the statutory formula in section 75 of the Pension Act.
Annual adjustments ensure that basic monthly disability pensions and awards keep pace with the cost of living and price inflation. The annual adjustments are based on calculations that take into account: (a) annual increases in the Canadian Consumer Price Index; and (b) average wages of certain categories of federal public sector employees minus income tax for a single person calculated in the province with the lowest combined provincial and federal income tax rate (“Wage Rate”).
On 5 November 2018, Canada’s Veterans Ombudsman announced that his office had discovered that Veterans Affairs Canada (“VAC”) had failed to factor the basic provincial tax credit into the Wage Rate used in indexing calculations under section 75 of the Pension Act, which resulted in “an accounting indexation error” by VAC and lower annual adjustment rates than what the rates would have been in the absence of the error. This error led to reduced payments to eligible recipients of disability benefits. The Veterans Ombudsman reported that VAC estimated that this error affected about “270,000 Veterans” of the Canadian Armed Forces and the Royal Canadian Mounted Police as well as “survivors and their estates”. The Government of Canada has publicly acknowledged this error and announced that $165 million had been secured for correcting the error, which Canada has said it will pay out without interest.
Based on access to information requests and other investigations made since the Veterans Ombudsman discovered the original indexation error, the Plaintiffs have learned about additional errors in VAC’s annual indexing calculations under section 75 of the Pension Act, and allege:
- VAC failed, from 2002 to present, to calculate the Wage Rate using the province or territory with the lowest combined provincial and federal income tax rate (the Nunavut income tax rate should have been used instead of the rates applicable in Ontario and British Columbia);
- VAC failed, from 2007 to present, to include the Canada Employment Amount in its calculation of the Wage Rate; and
- VAC failed, from 2002 to present, to include the Northern Resident Deduction in its calculation of the Wage Rate.
The Plaintiffs allege that affected individuals are entitled to interest on the amounts wrongfully withheld and that they are entitled to equitable compensation for loss of use of entitlements on the amounts wrongfully withheld.
Who does the claim affect?
On 23 December 2020, the Federal Court certified the action as a class proceeding. The class is defined as:
All members and former members of the Canadian Armed Forces and Royal Canadian Mounted Police, and their spouses, common law partners, dependants, survivors, orphans, and any other individuals, including eligible estates of all such persons, who received – at any time between 2002 and the present – disability pensions, disability awards, and other benefits from Veterans Affairs Canada that were affected by the annual adjustment of the basic pension under section 75 of the Pension Act including, but not limited to, the awards and benefits listed at Schedule “A” of the certification order:
- Pension Act: pension for disability; pension for death; attendance allowance; allowance for wear and tear of clothing or for specially made apparel; and exceptional incapacity allowance;
- Veterans Well-being Act: disability award; and clothing allowance;
- Veterans Well-being Regulations: remuneration of an escort;
- Veterans Health Care Regulations: remuneration of an escort; and treatment allowance;
- Veterans Review and Appeal Board Act: compassionate award;
- Civilian War-related Benefits Act: war pensions and allowances for salt water fishers, overseas headquarters staff, and air raid precautions workers; and injury for remedial treatment of various persons and voluntary aid detachment (World War II);
- Children of Deceased Veterans Education Assistance Act: monthly allowance for education; and
- Flying Accidents Compensation Regulations: flying accidents compensation.
Miscalculation of Disability Pensions Class Action Settlement
If you are a member or former member of the Canadian Armed Forces or the Royal Canadian Mounted Police – or a spouse, common law partner, or dependent of a veteran – and you received, at any time between 2002 and the present, certain disability benefits from Veterans Affairs Canada, you may be a member of the class. Eligible estates of persons who received these disability benefits may also be class members.
You were not required to opt-in to the action in order to be a class member. Please visit the Settlement website for claim forms and important information about the settlement process.