Question Period Note: PARLIAMENTARY BUDGET OFFICER REPORT

Parliamentary Budget Officer Report:
“The Cost Differential between Three Regimes of Veterans Benefits”

• The needs of Canada’s Veterans have changed significantly over the past century. Since the Pension Act was introduced in 1919, our programs and services have continued to evolve to meet Veterans changing needs. Pension for Life is part of this evolution.

• Pension for Life addresses concerns made by the Veteran and military communities by providing those with a service-related injury or illness the opportunity to determine the best form of compensation that works for them and their families.

• Combined with initiatives announced in Budget 2016 and Budget 2017, the Government of Canada has invested nearly $10 billion to improve benefits for Veterans and their families.

• Pension for Life demonstrates that this Government is investing more in Veterans to ensure their individual needs are being met.

• The majority of Veterans will be financially better off under the new Pension for Life regime compared to the existing Veterans Charter.

• The Department has reviewed the Parliamentary Budget Officer report and will continue to monitor the impacts of Pension for Life to ensure Veterans needs are met.

BACKGROUND – Parliamentary Budget Officer Report: “The Cost Differential Between Three Regimes of Veterans Benefits”
Media background of 21 February 2019:

On February 21, 2019, National Newswatch published an article titled Some disabled veterans to receive less financial support under Liberal plan: PBO by Lee Berthiaume. The article says that while most disabled Veterans will see a small boost in financial support when the Trudeau government implements a new pension system in April, a new analysis shows some of the most severely injured will end up with less than under the current system. It also states that, the Parliamentary Budget Officer Yves Giroux confirmed what many Veterans have alleged: that the Liberals' Pension for Life doesn't offer the same level of support as the pre-2006 Pension Act. "From the perspective of the veteran, virtually all clients would be better off if they were to receive the benefits of the Pension Act," reads the report.

The article adds that Giroux did find that most Veterans will see a 6% increase in financial support under the Pension for Life than the current system, which was implemented with all-party support in 2006. But about 5% of Veterans who apply for benefits after April 1, 2019, when the new system comes into effect, will actually receive less under the new system — notably the most severely injured. That is because the government did away with a monthly, lifelong benefit designed to compensate those Veterans whose service-related injury or illness prevents them from being able to work. The change only affects Veterans who apply for benefits after April 1, 2019, when the new system comes into effect.

Back in 2015, the Parliamentary Budget Office undertook an analysis of financial support provided to disabled Veterans under the New Veterans Charter (NVC). The aim of this analysis was to better inform parliamentarians of the post-combat cost of providing financial benefits to eligible ill and injured Veterans under the New Veterans Charter over the next 10 years.

This most recent report responds to requests from Parliamentarians for the Parliamentary Budget Officer to compare the two most recent regimes of Veterans’ benefits to Pension for Life which took effect on April 1, 2019:

1. Previous Pension Act benefits (in existence prior to the implementation of the New Veterans Charter in 2006);
2. New Veterans Charter benefits effective 2006 with Pension Act benefits “grandfathered” into the future with no other changes.

The report is structured around aggregate lifetime cost of these three benefit regimes or legislation – had the others not existed. The report presents the cost to the Federal Government of the three regimes had they been in place in 2019, specifically the Parliamentary Budget Officer calculated the lifetime, net present value (2019 dollars) of benefits for clients in the system as of 2018 as well as new entrants projected over the period 2019-2023.

The report’s finding show the following:
Total
Pension Act $50 Billion
NVC as it exists today $29 Billion
Pension for Life $32 Billion

This analysis shows that although not as rich is the Pension Act, Pension for Life is an improvement over the New Veterans Charter.

On May 19, 2019, Prime Minister Justin Trudeau announced during Question Period that he had instructed Veterans Affairs Canada to ensure Veterans are better off under Pension for Life than they were under the New Veterans Charter.

Criticism in the Report
The report states that mainly as a result of the elimination of the Career Impact Allowance Supplement (CIAS), 5% of new entrants (who were not previously clients) would have received greater life-time payments under the New Veterans Charter, with 3% “greatly disadvantaged” financially as a result of the elimination of the Career Impact Allowance Supplement (CIAS).

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