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Speaking up and speaking out, Mike Blais adresses Ottawa.


Michel Drapeau Law Office

Michel Drapeau Law Office provides a wide range of services focused on federal law with emphasis on Military Law, Freedom of Information (access) and Privacy Law, Wills and Estates Law and Human Rights Law.

Le cabinet juridique Michel Drapeau propose une vaste gamme de services et se spécialise en droit fédéral canadien, notamment les droits militaire, la sécurité publique, ainsi que les droits de la personne, incluant les questions visant le harcèlement et les pratiques discriminatoires ainsi qu'en accès à l'information, le droit à la vie privée.


Comparative Evaluation of the Pension Act with the "New Veterans Charter"

prepared by
Louis-Félix Molgat-Mirecki
(Canadian Veterans Advocacy)
January 27th, 2014

Mr. Molgat-Mirecki was a Canadian Forces Reservist from 2003 to 2009 (3rd Field Engineer Squadron and 33rd Combat Engineer Regiment). He is educated at Dalhousie University, the University of Ottawa and worked at Statistics Canada.

As a member of the Canadian Veterans Advocacy Team he creates reports and analyses of governmental documents including Governmental Audit Conclusion Reports. He conducts investigations of DND and WSIB compliance with OHS related legislation, regulations and Bill C-45 regarding Reservists. He conducted a statistical analysis of Veteran`s Affairs Canada office closures. He monitors, evaluates, and reviews websites, newspapers and posts information on the Canadian Veterans Advocacy "Information Repository".

PURPOSE:

The purpose of this document is to understand the monetary value differences between the Pension Act and the New Veterans Charter. The tables in this document represent an estimated monetary value of the benefits provided by the Pension Act in comparison to the estimated monetary value of the New Veterans Charter.

All figures come from the "Evaluation of Disability Pensions and Awards" document provided by Audit and Evaluation Division of Veterans Affairs Canada. (Annex 1, page 12-13). The documents were sourced from Veterans Affairs Canada (VAC) website.

Table 1: Canadian Veterans Advocacy (CVA) identifies the elements for which there may be payments.

Tables 2 and 3: Veterans Affairs Canada (VAC) include some of the elements for which there may be payments.

The case scenario is used in the tables comparing the value of the Pension Act benefits and the value of the New Veterans Charter benefits.

Case scenario

"98 %+ disability. In this scenario, a CF client has assessed disabilities totaling 98%. As a CF member, the client's indexed monthly salary as a corporal as of March 31, 2010, was $4,663. The Veteran is married and both he and his spouse are 28 years of age and, two kids, at the time the application for disability benefits and other programs is made. The life expectancy of the Veteran is 72, while his wife is expected to live to age 79. The Veteran has one year of service and is not in receipt of Canadian Forces Superannuate."
(The Audit and Evaluation Division, 2010)

OBSERVATIONS:

Looking at the corrected numbers, it is inconceivable to come to the same conclusion as Veterans Affairs Canada (VAC) that states the New Veterans Charter is preferable to the Pension Act. In fact, the opposite is true.

Questions exist regarding the quality of the audit conducted by the Audit and Evaluation Division from Veterans Affairs Canada on the Evaluation of Disability Pensions and Awards document. It is difficult to comprehend why there are so many different inflation rates used for the same table. There should never be a mix of inflation rates when comparing the same type of data in a table. The reader should understand that none of the calculations were adjusted to fit the needs of, in this case, Veterans Affairs Canada.

This audit should have corrected deflation rates. The 'Present Value' column should indicate amounts without inflation. If it was important for VAC to indicate inflated amounts in the table, they should have used a column with the title 'Future Value'. Amounts calculated with an inflation rate should be clearly marked and should have indicated the inflation rate used (or show the type of calculation used for the inflation rate.

Comparative Evaluation Outcome:

The following table represents the differences in percentages and dollars of the net loss veterans experience when the Pension Act is replaced by the New Veterans Charter.

New Veterans Charter
Net Loss ($/%)
CVA's Table 1. (without inflation) $2,118,380.54
41.18%
VAC's Table 3. (without inflation) $33,079.54
1.27%

These tables summarize differences between the Pension Act and the New Veterans Charter.

TABLE 1.A
Canadian Veterans Advocacy – with rehabilitation values (without inflation) Summary


Pension Act New Veterans Charter
Present Value ($)
(these rehabilitation values are not indicative of money the veteran receives in pocket, they are part of the maximum of services received through VAC Services)
$5,574,916.56 $3,456,585.50

TABLE 1.B
Canadian Veterans Advocacy – without rehabilitation values (without inflation) Summary


Pension Act New Veterans Charter
Present Value ($)
Without Rehabilitation Values
(Actual amounts the Veteran receives in Pocket)
$5,144,762.04 $3,026,381.50

TABLE 2
Veterans Affairs Canada (with inflation) Summary

Pension Act New Veterans Charter
Present Value ($)
Veterans Affairs Canada
does not add the Rehabilitation Values in this Version of their comparitive evaluation of the Pension Act and the New Veteran Charter
With Rehabilitation Values
(these rehabilitation values are not indicative of money the veteran receives in pocket, they are part of the maximum of services received through VAC Services)
$2,895,092.90 $2,614,714.53

TABLE 3
Veterans Affairs - inflation removed from 'Present Value' column Summary

Pension Act New Veterans Charter
Present Value ($)
Veterans Affairs Canada
does not add the Rehabilitation Values in this Version of their comparitive evaluation of the Pension Act and the New Veteran Charter
With Rehabilitation Values
(these rehabilitation values are not indicative of money the veteran receives in pocket, they are part of the maximum of services received through VAC Services)
$2,604,864.24 $2,571,784.70

TABLE 4
Summary of inflation rates used by Veterans Affairs Canada Summary


Pension Act New Veterans Charter
Average Inflation rates (%)
12.72% -12.92%

The reason for using a comparative table of the inflation rates is because when it was attempted to recreate the calculations from the original numbers it was impossible to obtain the same figures that were given by VAC's, Audit and Evaluation Division in the Audited document: Evaluation of Disability Pensions and Awards.

We conclude that VAC had employed an inflation rate calculation. Some present values were completely miscalculated. The Veterans Ombudsman confirmed that all calculations use inflation rates but that any differences that show more than .3 % difference are significant and should be reported.

The table shows the differences between the Calculated Averages of inflation rates used by Veterans Affairs Canada, Audit and Evaluation Division for the Audit document: Evaluation of Disability Pensions and Awards. Average inflation rates are indicative that there is an issue.

Table 4 shows the individual inflation rates for each monetary program under the Pension Act and the New Veterans Charter. Some numbers are using the same inflation rates but some are completely different and some even show deflation rates which should never appear. The inflation rates were used by calculating:

Present Values of Table 2 (Minus) Present Values of Table 3 (Divided by) Present Values of Table 3 (Multiplied by) 100

The following tables were used to calculate the differences between the Pension Act and the New Veterans Charter.

TABLE 1

Canadian Veterans Advocacy (without inflation)

Pension Act New Veterans Charter
Payment ($) Present Value ($)
(B)
Payment ($) Present Value ($)
(B)

Disability Pension (98%)
Paid over 45 years

2,397.83

1,294,828.20

Disability Award (98%)
One time lump-sum

276,079.70

276,079.70

Additional Pension for Spouse
Paid over 45 years

599.46

323,708.40

Additional Pension for Spouse
Paid over 45 years

0.00

0.00

Additional Pension for Child 1
Paid over 25 years

311.72

93,516.00

Additional Pension for Child 1
Paid over 25 years

0.00

0.00

Additional Pension for Child 2
Paid over 25 years

227.79

68,337.00

Additional Pension for Child 2
Paid over 25 years

0.00

0.00

Attendance Allowance grade 3
Paid over 45 years

952.02

514,090.80

Attendance Allowance grade 3
Paid over 45 years

0.00

0.00

Permanent Impairment Allowance (PIA)
+ PIA SupplementPaid over 45 years

2,163.00

1,168,020.00

Permanent Impairment Allowance (PIA)
+ PIA SupplementPaid over 45 years

2,163.00

1,168,020.00

Survivor Pension
Paid over 6 years in 45 years

1,798.37

129,482.64

Survivor Pension
Paid over 6 years in 45 years

0.00

0.00

Earnings Loss
Paid over 37 years

3,497.25

1,552,779.00

Earnings Loss
Paid over 37 years

3,497.25

1,552,779.00

Supplementary Retirement Benefit
Paid at age 65

0.00

0.00

Supplementary Retirement Benefit
Paid at age 65

29,502.80

29,502.80

Total - (no medical rehab cost)

$5,144,762.04

$3,026,381.50

 

Indicate none economical values

 

Rehabilitation – medical/psychosocial*
44 years

9,620.00

423,280.00

Rehabilitation – medical/psychosocial*
44 years

9,620.00

423,280.00

Rehabilitation – vocational for spouse*
2 years

3,462.00

6,924.00

Rehabilitation – vocational for spouse*
2 years

3,462.00

6,924.00

 

 

 

 

 

 

Total

5,574,966.04

Total

$3,456,585.50

Note: Under the Pension Act, both SISIP 75% and Earning Loss are available. Both are calculated the same way, such as 75% of yearly salary. Only one or the other can be applied at one time.

TABLE 2

Veterans Affairs Canada (with inflation)

Pension Act New Veterans Charter
Payment ($) Present Value ($)
(B)
Payment ($) Present Value ($)
(B)

Disability Pension (98%)
Paid over 45 years

2,397.83

1,432,319.81

Disability Award (98%)
One time lump-sum

276,079.70

276,079.70

Additional Pension for Spouse
Paid over 45 years

599.46

358,088.95

Earnings Loss
Paid over 37 years

3,497.25

1,686,049.51

Attendance Allowance grade 3
Paid over 45 years

952.02

568,691.55

Supplementary Retirement Benefit
Paid at age 65

29,502.80

17,319.58

Exceptional Incapacity Allowance grade 4
paid over 45 years

634.73

379,157.57

Permanent Impairment Allowance grade 3
Paid over 44 years

536.40

312,570.17

Survivor Pension
Paid over 6 years in 45 years

1,798.37

156,835.02

Rehabilitation – medical/psychosocial*
44 years

9,620.00

315,821.05


Rehabilitation – vocational for spouse*
2 years

3,462.00

6,874.52

Total

$2,895,092.90

Total

$2,614,714.53

Source: (The Audit and Evaluation Division, 2010)

TABLE 3

Veterans Affairs Canada - inflation removed from 'Present Value' column

Pension Act New Veterans Charter
Payment ($) Present Value ($)
(A)
Payment ($) Present Value ($)
(A)

Disability Pension (98%)
Paid over 45 years

2,397.83

1,294,828.20

Disability Award (98%)
One time lump-sum

276,079.70

276,079.70

Additional Pension for Spouse
Paid over 45 years

599.46

323,708.40

Earnings Loss
Paid over 37 years

3,497.25

1,552,779.00

Attendance Allowance grade 3
Paid over 45 years

952.02

514,090.80

Supplementary Retirement Benefit
Paid at age 65

29,502.80

29,502.80

Exceptional Incapacity Allowance grade 4
paid over 45 years

634.73

342,754.20

Permanent Impairment Allowance grade 3
Paid over 44 years

536.40

283,219.20

Survivor Pension
Paid over 6 years in 45 years

1,798.37

129,482.64

Rehabilitation – medical/psychosocial*
44 years

9,620.00

423,280.00


Rehabilitation – vocational for spouse*
2 years

3,462.00

6,924.00

 

Total

$2,604,864.24

Total

$2,571,784.70


Table Legend

Calculation with inflation

Not money in pocket *

Nota Bene: TABLE 2. 'Present Values' column actually reflects future values, except for the Disability Award (98%).

There is no mention anywhere in VAC's Table that the 'Present Values' column has inflation calculations included.

TABLE 4

Representation of inflation rates used by Veterans Affairs Canada

Pension Act New Veterans Charter
Payment ($) Inflation (%)
Payment ($) Inflation (%)

Disability Pension (98%)
Paid over 45 years

2,397.83

10.62%

Disability Award (98%)
One time lump-sum

276,079.70

0%

Additional Pension for Spouse
Paid over 45 years

599.46

10.62%

Earnings Loss
Paid over 37 years

3,497.25

8.58%

Attendance Allowance grade 3
Paid over 45 years

952.02

10.62%

Supplementary Retirement Benefit
Paid at age 65

29,502.80

-70.34%

Exceptional Incapacity Allowance grade 4
paid over 45 years

634.73

10.62%

Permanent Impairment Allowance grade 3
Paid over 44 years

536.40

10.36

Survivor Pension
Paid over 6 years in 45 years

1,798.37

21.12%

Rehabilitation – medical/psychosocial*
44 years

9,620.00

-25.39


Rehabilitation – vocational for spouse*
2 years

3,462.00

-0.71

 

Average

12.72%

 

-12.92%


Table Legend (refer to Table 2. and Table 3.)

Calculation with inflation

Inflation Calculation ((B-A)/A)x100
Not money in pocket *

Nota Bene: The average inflation percentage should not be used as a comparative tool. It is included here to bring attention to the issue of inflation rates.

RECOMMENDATIONS:

Canadian Veterans Advocacy would like Veterans Affairs Canada to create a table incorporating every option available for veterans so individual veterans would be able to create their own personal comparative tables.

The issue with these tables is that they do not reflect all the different veteran classifications. Veteran Reservist have been excluded from these comparative tables.

It would be interesting to know how much difference exists between the same injury for a member of the Regular Forces and a member of the Reserve Forces. Veterans Affairs Canada should remember that all services are applicable to the Pension Act and the New Veterans Charter equally when they construct their tables. The only difference is that some services are not paid out in the New Veterans Charter.

If the use of inflation rates is important for Veterans Affairs Canada, the column indicating 'Present Value' should be transferred to 'Future Value'.

Canadian Veterans Advocacy believes that numbers speculation for any number of years is dangerous. It would be safer to keep the 'Present Value' column and not to calculate inflation rates. It is very easy for individuals to manipulate numbers when inflation rates are added.

Annex A

Bibliography

How to Calculate inflation rate. (2013). Retrieved from Rate Inflation: http://www.rateinflation.com/inflation-information/calculate-inflation

The Audit and Evaluation Division. (2010). Evaluation of Disability Pensions and Awards. Charlottetown: Veterans Affairs Canada. Retrieved in 2013.


Click here to download Presentation
Click here to download Annex A