Veterans Affairs Committee on Nov. 5th, 2009

[The Chair, Conservative, David Sweet]

Ladies and gentlemen, bonjour à tous. Welcome to the 32nd meeting of the Standing Committee on Veterans Affairs.

We have four guest witnesses with us today. I ask them to be patient for a moment while we handle a brief amount of business, and then we'll go right to them, our witnesses: Mr. Labelle, Mr. O’Handley, Mr. White, and Mr. Mallette.

We have a note from Ste. Anne's Hospital suggesting that our visit and tour scheduled for the last week of November be changed to December 3. I thought we could easily get unanimous consent on that. Is that okay with everybody? I believe December 3 is a Thursday as well.

[Roger Gaudet, Bloc, Montcalm, QC]

That's perfect, Mr. Chair.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Gaudet.

Mr. Stoffer, do you want to ask something?

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Chairman, did you say December 3?

[The Chair, Conservative, David Sweet]

That's correct.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Just so you know, I probably won't be able to be there, as we'll be on that overseas trip that we mentioned earlier. But I'll have a representative come on our behalf, so it's no problem.

[The Chair, Conservative, David Sweet]

Okay, then we'll contact Ste. Anne's Hospital and make the appropriate adjustments.

Again, welcome to our guest witnesses. What I need to ask the four gentlemen is whether everybody has some opening remarks or wants to say something prior to questions.

Okay, we'll start with Mr. Mallette. Generally, we like to keep the opening remarks down to 10 minutes. It will consume a lot of your time if all of you go for 10 minutes, but that will be your option. Then we'll move to questions.

Without any further delay, Mr. Mallette.

[Pierre Mallette, National President, Syndicat des agents correctionnels du Canada, Confédération des syndicats nationaux (CSN)]

Good morning, ladies and gentlemen. My name is Pierre Mallette, the National President of the Union of Canadian Correctional Officers, a CSN affiliate. Since 1986, I have worked as a corrections officer at Donnacona Institution, a federal maximum security penitentiary in Quebec. I would first like to thank the committee members for giving us an opportunity to address the important issue of retirement.

The Union of Canadian Correctional Officers represents more than 6,000 members working in 58 institutions in eight provinces. We recognize and support Bill C-201 and its goal of substantially improving pension benefits for specific—and certainly deserving—groups, namely, Canadian Armed Forces and RCMP officers.

Both groups face risks in their professions that go far beyond what most people would normally expect to encounter in their jobs. The situation of correctional officers is in all respects identical to that of soldiers and RCMP officers. We face repeated violence and assault, and we have to use firearms and make rapid decisions that are matters of life and death. These situations have a major impact on the physical and mental health of correctional officers, and one of the possible effects is post-traumatic stress syndrome.

Improving pension income has been a concern for the Union of Canadian Correctional Officers since 2002. In our brief, you will find a summary of the numerous efforts made by the union to persuade political parties, various governments and Treasury Board of the fairness of that demand. What we are asking is that the annual pension accrual rate be raised to 2.33% from 2% per year of service. Why? Because we believe our formula is preferable. When the people concerned retire, they will be able to receive a higher income more quickly than is provided in Bill C-201.

Eliminating the age 65 reduction will provide additional money a few years after retirement, and not during the period when they need it most, before age 65. Why is this demand justified? Because we believe it is a question of fairness to the other employees in the public service.

It's because we believe it is a question of equity with other employees of the federal public service.

Those other employees work for 35 years and accumulate pension income equal to 70% of their five best years. For an employee in an occupation associated with public safety or the armed forces, the Government of Canada recognizes that the working conditions involved in their job is harmful to their health. Their pension plan therefore allows them to take retirement after 25 years' service. However, it then pays them a pension equal to 50% of their five best years.

To be fair to all its employees, the government has to change the pension plans to allow a minimum of 2.33% per year of service to be accumulated. Twenty-five years' service in corrections is equivalent to 35 years' regular service in the public service. The value of those years has to correspond to the same value in the pension plan. This is a matter of safety. The benefits currently paid by the plans are so low that very few employees retire after 25 years' service. As mentioned earlier, after 2 years' service, correctional officers' health and work are affected.

For the safety of the public and the employees, the government must not only allow them to retire after 25 years' service, it must also provide them with the resources. This is the responsibility of parliamentarians and not a mere matter of payment by Treasury Board. Treasury Board officials did not want to recommend changing the pension accrual rate for corrections officers. They compare corrections officers' annual earnings with the earnings of regular employees on an annual basis. They did not want to take into account principles such as fairness and safety.

The women and men elected to govern Canada cannot reject those principles when they analyze the problem. Not only do they have to take them into account, they must also ensure that those principles are respected. We think our demand is preferable to Bill C-201. However, if Parliament decides to pass that bill, we are asking that we be included in it because improving retirement income is crucial for our members. It is also a matter of restoring fairness in relation to the military and the RCMP.

I would like to thank you for your attention during my intervention. I am now ready to answer your questions.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Mallette.

Mr. White, please proceed.

[Brad White, Dominion Secretary, Royal Canadian Legion]

Good morning, Mr. Chair and members of the Standing Committee on Veterans Affairs. I am Brad White, the dominion secretary of the Royal Canadian Legion. On behalf of the dominion president of the Royal Canadian Legion, Comrade Wilfred Edmond, our 360,000 members, and with the support of the Naval Officers Association of Canada, it is a pleasure to appear today at your committee to discuss issues related to Bill C-201. As well, I have provided each of you with a copy of my remarks.

As you are aware, members of the Canadian Forces and the RCMP were not consulted when the Canada Pension Plan was introduced in 1966. They were not asked whether they wanted stacked or bridged benefits. It was simply assumed that with the introduction of the Canada Pension Plan, Canadian Forces members and members of the RCMP would decide to reduce the level of their total pension contribution costs by reducing the scope of the Canadian Forces Superannuation Act and the RCMP Superannuation Act. This was done in a very paternalistic manner, as the CFSA contributions were reduced to offset CPP contributions. Similarly, Canadian Forces and RCMP members were not fully briefed or even consulted on the outcome of this decision by their employer, namely that the CFSA and RCMPSA benefits would be offset by their CPP benefits at age 65. Additionally, a ministerial promise was made at that time that pension cutback occurring at age 65 would never be larger than the actual CFSA, RCMPSA, and CPP benefits at age 65.

We are aware that this approach was consistent with what took place in the public service. We're also aware that the members of the RCMP and the Canadian Forces members and public servants can collect reduced CPP benefits starting at age 60. However, this assumes that employees retire from the workforce for a set period of time. We are aware that public servants can easily qualify for eight weeks of unpaid leave, leave without pay, as part of their bargaining agreements, and can thus start collecting Canada Pension Plan benefits at age 60, and then return to work, collecting both a government salary and their CPP, which more than offsets any CPP reduction at age 65.

This is not the case for members of the Canadian Forces and members of the RCMP. They generally retire at age 60 or before. The reality is that for those members of the Canadian Forces and the RCMP who start collecting early CPP benefits at age 60, the payback will be negative within seven years of collecting the Canada Pension Plan benefits.

Canadian Forces and RCMP members are not public servants. They must retire before the age of 65. They do not have bargaining agents like public servants do. Members of the Canadian Forces and RCMP pay into unemployment insurance but are unable to collect any benefits related to this program if receiving an annuity. As a result of the offset of CPP benefits at age 65, some annuitants end up receiving a reduced CFSA/CPP annuity because of the bridge arrangement between the Canadian Forces Superannuation Act and the RCMP Superannuation Act benefits and the CPP, notwithstanding the ministerial promise made to the contrary.

During the time that Canadian Forces and RCMP members were contributing to both the Canadian Forces and RCMP Superannuation Acts and the CPP, the superannuation pension fund accumulated a very large surplus, which was used by the government to pay down the national debt rather than to meet the needs of those who made voluntary payments. We are also being told that the ministerial promise was beyond the scope of the coordination provisions between the two pension schemes. This is an easy way to explain away a promise: blame the plan, not the promise.

There is no question that men and women of the Canadian Forces and of the RCMP serve their country at a risk to their lives. They often sacrifice their health. Their contributions to superannuation funds were used by the government not to provide them direct benefits, but to pay down the national debt. They were not consulted on whether they would favour stacked or bridged benefits for CPP and the superannuation acts disbursements.

Their overcontributions to the Canadian Forces and RCMP Superannuation Acts resulted in a large surplus, which was not used to provide direct benefits. In other words, they have been treated unfairly. This is an issue of simple fairness and recognition of the unique contributions that members of the Canadian Forces and the RCMP make on behalf of a nation. We are not asking for retroactivity; we are simply advocating for justice and fairness through the elimination of the offset of CPP benefits, starting now.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. White.

Now we move to Mr. O'Handley.

[Roddie O'Handley, Retired Constable, Royal Canadian Mounted Police, As an Individual]

Good morning to everyone present here today.

Let me first introduce myself by saying my name is Roddie O'Handley and I'm from Halifax, Nova Scotia. Thank you for having me here to speak on this important bill, Bill C-201.

I was asked to speak on Bill C-201 because I have just experienced the ramifications of having my personal RCMP disability pension reduced. Let me tell you how I experienced that and how it directly resulted in a clawback to me.

I retired from the RCMP with a disability pension. As a result of the disability pension, I was entitled to 75% of my best five years of wages. When I retired, I had 32 years and 11 days of service. This meant I received 64% from my RCMP pension, provided by Morneau Sobeco. The other 11% was made up by the Great-West Life Assurance Company.

The RCMP's 64% gave me a total of $3,610.80 per month. Great-West Life paid me 11%, which was $1,036.42 per month. This gave me a total income, when I retired, of $4,647.22 per month. That's what I got.

After two years, Great-West Life sent me a letter advising me that I was no longer eligible to receive disability benefits from them. This reduced my pay by 11%, or $1,036.42--although there was no change to my medical profile. That stayed the same.

After that, I hired a pension advocate to try to get my Great-West Life pension back. The pension advocate advised me to apply for a Canada disability pension. On his advice, I applied for a Canada disability pension and I was successful in getting it.

As a result of being successful in obtaining a Canada disability pension, I informed the RCMP pension providers that I had received a Canada disability pension. They, in turn, sent me a letter on October 27, 2009, stating that because I was successful in obtaining a Canada disability pension, my RCMP pension would be reduced by $719.28, a considerable loss to me.

Now let's look at the actual dollar amounts I received after clawbacks and how much I have actually received in real money. Here is the breakdown from start to finish.

When I retired, I got $3,610.80, or 64%, from the RCMP. I got $1,036.42, or 11%, from Great-West Life. As I said before, that was a total of $4,647.22 per month. After two years, I lost the $1,036.42, the Great-West Life benefits, leaving me with $3,610.80 from my RCMP pension. Canada disability gave me $1,104.26. The RCMP clawed back $719.28. Out of that money, I gained $384.98 per month.

Canada disability also gave me a retroactive cheque in the amount of $16,405.26. The RCMP is taking $11,403.24. That leaves me with $5,002.02, on which I have to pay income tax.

The RCMP pension plan shouldn't have the right to take any of the money that was awarded to me from the Canada disability pension, because I paid into an RCMP pension plan to pay me a pension of 2% per year for each year I worked. I worked 32 years in the RCMP; therefore, I'm entitled to receive 64% of my best five years' salary when I retire. They shouldn't be allowed to reduce that because I received the Canada disability pension. In fact, because I retired from the RCMP with a disability pension, I'm entitled to 75% of my wages. When the RCMP reduced my pension by $719.28, that gave me less than the 75% I'm entitled to.

They didn't reduce the pension when I got it from Great-West Life, meaning when I got the pension from Great-West Life I was allowed to get the combination of the two. But because of the regulations, when I got it from Canada disability, the RCMP clawed back $719.

To me, this is the same as someone taking something out of my pocket. Why? Because I paid into the pension plan to pay me 2% per year for every year I worked for the RCMP. I worked for 32 years, therefore I'm entitled to 64% of my wages, regardless of what other source of income I may have.

I will leave you with this final thought: you have the power to treat all pensioners as equals, so please do so.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. O'Handley.

Mr. Labelle, please go ahead with your remarks.

[John Labelle, Military and Royal Canadian Mounted Police Veteran, As an Individual]

If I speak too loudly, simply nudge me and I'll try to move back from the microphone. Thank you.

Mr. David Sweet, chairman of the board, members of the committee, ladies and gentlemen...Bill C-201, An Act to amend the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act (deletion of deduction from annuity). On behalf of Mr. Roger Boutin, Mel Pittman, and numerous committees across Canada, I wish to thank you for the opportunity to speak to the veterans affairs committee regarding member of Parliament Mr. Peter Stoffer's Bill C-201.

The purpose of this initiative is to convince the Prime Minister of Canada to take action to terminate the benefit reduction formula that has been applied to our military and RCMP veterans' annuity when they attain age 65, or sooner if they become disabled. The Government of Canada must right a wrong by amending the Canadian Forces Superannuation Act and the RCMP Superannuation Act of a miscalculation in justice and fairness that now affects our retired veterans and their families during their golden years.

The 2006-07 annual pension report indicated that there were 84,728 military pensioners and 12,331 RCMP pensioners. The total cost for the Canadian Forces veterans' pension benefits was $2.2 billion and the cost of the RCMP pensioners' benefits was $451 million. It is estimated that the termination of the CPP benefit reduction program may affect 50,000 pensioned veterans.

You are aware that the Canada Pension Plan was introduced in 1965-66. Its intention was to provide another source for an income security program, supplementing old age security. Military and RCMP veterans maintain that in 1965-66 the Government of Canada, deliberately or otherwise, imposed on military and RCMP personnel a gross injustice and unfairness by merging rather than stacking their pension contributions and benefits and not providing any options to them.

Canadian Forces superannuation facts. On January 1, 1966, the Canadian Forces employee contribution rate was reduced from 9.3% to 7.5%. Hence, a “so-called” reduced annuity contribution to our Canadian Forces superannuation has accumulated a military annuity surplus of over $20 billion. It clearly indicates that our contributions to the Canadian Forces superannuation are sufficient to pay for our benefits without a reduction clause.

Canada Pension Plan facts. With regard to the CPP, the employee and the employer each paid half of the required contributions. In 1966 the government-levied rate of contribution for military personnel was 1.8% of basic earnings. Over the years the rate substantially increased to 4.95%. Military and RCMP personnel have always made the required maximum contribution to the plan. Recently the president and chief executive officer of the Canada Pension Plan Investment Board advised that the CPP fund is financially healthy, with a surplus of $120 billion.

It is a known fact that veterans were dealt with in a negligent fashion. In those past years senior military officers were not appointed an assistant deputy minister to represent them. Veterans were not properly briefed on the pitfalls associated with the merging of their contributions. In short, democracy did not occur. Veterans were not given any options. They always made the required maximum contributions. Veterans' contributions were listed separately on their pay guides, therefore giving them a false sense of financial security.

The words “bridge benefits” are not listed in the manual A-FN-109-001/ID-001, and furthermore the manual was never made available to serving personnel. The bridge benefit term was never heard of prior to the establishment of our campaign of pension justice and fairness. When pensioners are age 73, the government has recovered all of its funds and yet continues to collect a 30% gratuity/penalty for the rest of their lives.

Veterans are getting “100% of what they paid for”. Well, they are not getting what they paid for or their pension plan would not have accumulated a $20 billion surplus. With all due respect, veterans and their families have given far more of themselves to the security of our country than any other segment of the population. Therefore, in their golden years, they deserve to be treated with fairness, justice, and dignity. Military/RCMP veterans are a distinct and different government provider, and they have encountered a varying number of issues on a regular basis.

What financial value can we associate to loss of spousal income opportunity, therefore loss of spousal CPP benefits; loss of overtime revenues with the loss of the member’s second income opportunity; and loss of ability to purchase a home and be mortgage-free during a career? Veterans are a distinct government provider. They have served far abroad on numerous 16-hour days of operational requirements, 24/7. Veterans have often faced dangerous conditions—health hazards, and extended family separation with elevated levels of stress—and Canadian Forces/RCMP personnel were prepared to give the ultimate sacrifice to our country.

On depletion of CFSA surplus funds, the Government of Canada has withdrawn a $16.5 billion surplus from the military annuity funds to pay down the national debt. In 2003-04, reports indicate that a further $630 million surplus was also retired from our pension account. The 2004-05 pension report indicates that no funds were withdrawn from the account and that there was a surplus of $1.099 billion recorded in that year. Surplus pension funds have accumulated and were sufficient to pay for the termination of the CPP benefit reduction formula.

Why are pensioners' indexing revenues reduced at age 65? Why are disabled veterans' pensions reduced? Why reduce disabled veterans' pensions indexing revenues? Why establish the CPP plan if it benefits no one?

With respect to suggested solutions—and I'm sure they are not the only ones—to solve the pension benefit reduction issue that affects over 50,000 veterans at age 65, we suggest the following. One, stop depleting the surpluses in our pension account. Two, to stabilize the depleted funds in our pension account, transfer 15% of serving personnel contributions from the employment insurance account to the pension account. We receive no benefits from the employment insurance account. Three, eliminate the pension reduction formula to military/RCMP veterans' annuity when they attain age 65, or sooner if they become disabled. And four, retroactive payments are not requested.

To endorse the campaign, we have received very positive comments of support from our former senior officers. They include Major-General Lewis MacKenzie, the highest decorated officer of the Canadian Forces; Colonel Don Ethell, the highest decorated peacekeeping officer of the Canadian Forces; Commodore David Cogdon; RCMP Deputy Commissioner Larry R. Proke; Mr. Bill Gidley, executive director, RCMP Veterans Association; Chief Warrant Officer John Marr, former Canadian Forces chief warrant officer; Lieutenant Joe Fillion, former Maritime Command chief petty officer; and Chief Petty Officer first class Don Brown, former Maritime Command chief petty officer. A great number of senior officers have clearly supported the initiative that military and RCMP veterans have been mistreated, and the situation needs to be rectified.

This worthwhile initiative continues to grow. Over 112,500 supporters have pronounced their support. The Royal Canadian Legion, with approximately 500,000 members; the Army, Navy, and Air Force Veterans in Canada, with 20,000 members; and the Air Force Association of Canada, with 12,000 members, adopted resolutions at their annual general meetings in 2006 in full support of the initiative.

The late Captain Ed Halayko, national chairman of the Armed Forces Pensioners'/Annuitants' Association of Canada, supported our initiative, and the new national chairman of the AFP-AAC, Tony Huntley, supports our initiative.

We have received support regarding our mission from Mrs. Lillian Morgenthau, founder and president of CARP, Canada’s association for the 50-plus.

Numerous other military associations have declared their support of the objective. We have received support from veterans living in 18 countries. They include England; Mexico; Germany; CYQQ force; Florida; Warsaw, Poland; the Syrian Arab Republic; Greece; the U.K.; the U.S.A.; the Cayman Islands; Afghanistan; South Africa; Iraq; Thailand; Sarajevo, Bosnia; Italy; and Japan.

In conclusion, it is time to put the politics aside. It is time for all members of Parliament to demonstrate their recognition and appreciation in a tangible way to the men and women who have served and are currently serving our country. It is time to take action to terminate this undemocratic, unfair, and unjust treatment of veterans. Terminate this pension benefit reduction that has been imposed on them without fair and open consultation.

This misguided policy violates the principles of democracy, fairness, and justice as it affects the welfare of veterans and their families in their golden years. The committee is requested to send Bill C-201 back to the House of Commons for its third and final debate and vote. All leaders of the House are requested to allow the democratic process to take place by permitting members of Parliament to vote freely when Bill C-201 is presented to the House of Commons for its final vote.

Military and RCMP veterans have gallantly served Canada. They deserve nothing less than to spend their golden years with the pensioned financial dignity that they and their families have earned and paid for in so many different ways and that they so fairly deserve.

It has been over 40 years. Now is the time to resolve this military and RCMP veteran pension issue. This issue affects our disabled and the lower ranks of veterans the most. God bless our military and RCMP veterans, for it is their sacrifices that allow me to speak freely to you today. Let us not forget them.

It has been an honour and a privilege to serve our country, Canada, and we continue to serve today. We shall remember them.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Labelle.

We now go to questions for seven minutes. We will go to Madam Sgro, for the Liberal party.

[Judy Sgro, Liberal, York West, ON]

Thank you all very much for your interesting words this morning.

Every time I think we're getting ahead on this issue, to get a better understanding, you come back and throw out some more questions.

I certainly appreciate your contribution, all of you, what you've done for all of us. It's a difficult issue, and we've been hearing about this for some time, and Mr. Stoffer has, as always, championed these issues and makes sure that we're aware of them. The question is, where do we go from here on this issue?

Mr. Labelle, I appreciate some of the suggestions you have here. However, in regard to eliminating the pension reduction formula, I think it's very difficult to think we can go back, but the issue that continues to come up is clearly one of fairness. When any of you or your members went to retire, was this bridging issue not explained at that point?

We understood from our testimony the other day what's it's like when you're 25 or 30 and you're enlisting and you're not reading every page that says this is the way this is going to happen, but clearly, when you went on disability, Mr. O'Handley, did they not explain thoroughly that this is the income you have now but the following changes would happen?

[Roddie O'Handley]

I was led to believe that when I went on pension, the reasons I had for my disability pension would be enough reason to continue after I retired for an indefinite period of time. If I had believed for one instant that Great-West Life was going to cut $1,000, I would have stayed in the RCMP, because they were obligated to find me another job somewhere within the outfit. I couldn't do the job that I was presently doing because I didn't qualify, but they were obligated to find me a job somewhere within the organization.

I had a disability. Do I have time to explain what it was? Are you interested in that?

[Judy Sgro, Liberal, York West, ON]

Well, I have only seven minutes, and I'm going to try to get as much information from you as I can.

[Roddie O'Handley]

I didn't know. I went to an RCMP disability pension. When I got that RCMP disability pension, I was led to believe by the doctors who got it for me that it would continue. I asked about it continuing after two years, because, yes, I knew there was a possibility that I would lose it after two years. But I was led to believe, because of the disability I had, I had enough of a disability to continue it after the two years. It didn't work that way for me. It didn't pan out that way.

[Judy Sgro, Liberal, York West, ON]

Just so we can get a handle on this, Mr. O'Handley, in terms of that total reduction that you ended up with, versus your $4,647, which is what you initially had for the first two years, how much is the shortfall? If you add in your pension and your CPP to your total package, what's the difference between the $4,647 and what you're actually receiving today?

[Roddie O'Handley]

Today, because of the increases, I would have received $3,844.64. The RCMP deducted $719.28, which brought me down to $3,125.36. But when I got the $1,100, the $719 was taken out of that. So the $3,844.64 would have been reduced to $3,125.64, and I would have ended up with $385 more than that.

[Judy Sgro, Liberal, York West, ON]

Okay, but take away the “would have”, what I'm asking is what you are actually receiving, if you add up all of the things.

[Roddie O'Handley]

What am I actually making today?

[Judy Sgro, Liberal, York West, ON]

What are you making today when you add up all of the various pension benefits that you're getting?

[Roddie O'Handley]

I get $3,125, plus $385.