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Proceedings of the Subcommittee on Veterans Affairs

OTTAWA, Wednesday, October 28, 2009

The Subcommittee on Veterans Affairs of the Standing Senate Committee on National Security and Defence met this day at 12:12 p.m. to study the services and benefits provided to veterans and their families (topic: implementation of the New Veterans Charter).

Senator Michael A. Meighen ( Chair ) in the chair.

[ English ]

The Chair: Good afternoon to all of you and thank you for being with us. This subcommittee has been studying the implementation of the New Veterans Charter for the past several weeks and will likely continue to do so for a number of more weeks.

Today, we will be hearing from representatives of the two departments involved in this issue, Veterans Affairs Canada and the Department of National Defence. This meeting is a continuation of last week's discussion. I hope the conversation will be as productive.

From Veterans Affairs Canada, I am pleased to introduce Brian Ferguson, Senior Assistant Deputy Minister, Policy, Programmes and Partnerships and appearing with him is Mr. Keith Hillier, Assistant Deputy Minister, Service Delivery and Commemoration. From the Department of National Defence, I would like to welcome Colonel Gérard Blais, Director, Casualty Support Management and Brigadier-General (Ret'd) D. E. Martin, Director General, Personnel and Family Support Services. Accompanying them is Andre Bouchard, President, SISIP Financial Services.

We have already heard from most of you joining us today. The subcommittee will allow some brief opening remarks after which we will have questions from members of the subcommittee.

Before turning to General Martin, who I understand will introduce Mr. Bouchard or provide introductory remarks, I would like to complete some unfinished business from last week's meeting. Mr. Hillier has a response to the question raised with respect to the percentage of Canadian Forces personnel transitioning to Veterans Affairs.

Keith Hillier, Assistant Deputy Minister, Service Delivery and Commemoration, Veterans Affairs Canada: Mr. Chair, this is a follow-up from last week. Of the approximately 5,000 transition interviews that we did at Veterans Affairs, this is in relation to 6,195 Canadian Forces members who were released in that year. That 6,195 was the number I was not able to provide to the committee last week.

As you can see, a large number of members generally are taking advantage of the interview. Those who are medically released do not have a choice. They must go through a transition interview. Those who are not medically released are given an active offer for the transition interview. I am pleased to see the high take up among those who are leaving the Canadian Forces.

The Chair: Release includes those who decide their time is up and they want to move on.

Mr. Hillier: Yes, the number I gave you is the total of all releases, including those who may be taking retirement.

The Chair: Thank you Mr. Hillier. Have any members of the subcommittee a question in that regard?

Then we will move to Brigadier-General Martin.

Brigadier-General (Ret'd) D. E. Martin, Director General, Personnel and Family Support Services (DCSM), National Defence: Thank you honourable senators for permitting us to return and continue the testimony that we started last week. I am here today representing National Defence in my capacity as Director General, Personnel and Family Support Services. Two key organizations within my areas of responsibility are Casualty Support Management — Colonel Blais is here representing that group — and SISIP Financial Services who act for the Canadian Forces — represented by Mr. Bouchard.

Given that the time last week precluded a full discussion on long-term disability, I will turn to Mr. Bouchard to say a few opening remarks to set the stage for that discussion.

André Bouchard, President, SISIP Financial Services (DCSM), National Defence: Honourable senators, thank you for allowing me the opportunity to speak on behalf of SISIP Financial Services. During my previous appearance before this committee last year, I discussed the history of the SISIP long-term disability or LTD program, the impact of offsets to Veterans Affairs Canada's pension and outlined several other aspects of SISIP operations.

With your permission, I will provide an update on the most recent change to the SISIP LTD plan before I address the issue with respect to pension offsets.

SISIP has been the provider of financial products and services exclusively to serving and former Canadian Forces members and their immediate families since 1969. We are the primary provider of long-term disability benefits for Canadian Forces members, including the Vocational Rehabilitation Program.

The SISIP LTD is the disability insurance program for the Canadian Forces, and SISIP Affairs is charged with the execution of the policy on behalf of the CDS. The Vocational Rehabilitation Program allows approved claimants based on the principle of modern disability management to return to gainful employment once they have acquired the necessary skill sets.

[ Translation ]

Our intervention usually begins seven to nine months in advance of the member's date of release, and in the case of those members offered retention, SISIP Financial Services can be involved up to three years prior to release. Financial Services rehabilitation counsellors work interactively with the Joint Personnel Support Unit, personnel selection offices and Canadian Forces case managers, who provide documentation to the member's chain of command in support of an approved vocational plan.

[ English ]

SISIP claimants maintain the same SISIP Affairs rehab counsellor and LTD adjudicators during their participation in the program. This ensures consistency in delivery and cements historical knowledge of the specific circumstances that may impact the client.

With respect to recent LTD enhancement, Treasury Board Secretariat of Canada recently approved a very significant change to the SISIP LTD plan with respect to the premium structure. The last important change to the plan was made in December 1999.

Up until April 1, 2009, regular force Canadian Forces personnel paid 15 per cent of premium for service and non- service related injuries and illnesses, with the Government of Canada paying the remaining 85 per cent. Now, the Government of Canada pays 100 per cent premium for service related injures and illnesses and 85 per cent of the premium for non-service related injures and illnesses to military service.

The service related claims represent 70 per cent of all claims. With this new cost sharing formula, the members really save money on the premiums paid for SISIP LTD. It is illustrated in the table you have before you and in my remarks. If we go to the pre- April 1, 2009, the members paid $10.40 for an entry salary of $68,000. On April 1, with the change, the same member is paying $8.54. If the government had not accepted this split of premiums — to pay is 100 per cent of the premium for illnesses attributable to military service — the members would be paying $20.50.

I will now address the issue still outstanding, which is the reduction of Pension Act from SISIP LTD.

The Chair: I am sorry to interrupt. Before you talk about that, at the bottom of the first page, there is a typo, I think. I am not sure what is meant here by the last four words, "and illnesses to military services."

Mr. Bouchard: Those are illnesses directly attributable to military services. The word "attributable" is missing.

The Chair: Thank you.

Mr. Bouchard: With respect to the Pension Act from SISIP LTD, the reduction, you will recall that this issue was first raised by the ombudsman in his report in 2003. The report recommended that claimants who had been reduced by the amount of the monthly Pension Act be reimbursed retroactively to October 27, 2000. That is the date that Bill C-41 was enacted entitling any Canadian Forces member to a monthly pension while serving. In 2007, Manulife Financial estimated the cost to implement this recommendation at $270 million and this will involve over 4,286 claimants.

Subsequently, a class action was launched to challenge a long-term disability program offered through SISIP Financial Services. On May 20, 2008, the Federal Court certified the class action. The Crown appealed the decision and the Federal Court of Appeal agreed with the Crown's action on February 2009 to set aside the decision that certified the class action. On January 21, 2010 the Supreme Court of Canada will hear the appeal, and they will rule on whether the case can proceed as a class action or a judicial review.

Also, given that the plaintiff made a retroactive reimbursement of the pension offset back to April 1985, based on section 15(1) of the Canadian Charter of Rights and Freedoms, which states:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

Therefore, they are focusing on the area of the Charter that speaks about mental and physical disability.

It is now estimated that the total cost to the Crown will be in excess of $500 million if the plaintiff is successful, with the numbers of claimants eligible for reimbursement exceeding 6,200.

It is worthwhile to note that the monthly Pension Act benefit continues to be an offset against SISIP LTD benefit and all of the public sector plans, including the economic loss benefit under Veterans Affairs Canada. As this issue is before the courts, I cannot make any comments related specifically to this litigation.

The Chair: I have a question about the second paragraph: "Given that the plaintiff may demand." Has the plaintiff demanded that?

Mr. Bouchard: When the case was first heard in the Federal Court in Halifax, that point was raised, so this is a point of law that will be brought forward, should it be allowed to proceed as either a class action or judicial review, yes.

The Chair: Thank you.

Mr. Bouchard: SISIP Financial Services is not a private firm. SISIP is an entity of the Department of National Defence. SISIP Financial Services is a team of dedicated and highly-qualified professionals who are available to serve those who serve at 18 bases, wings and units across Canada.

To put this in perspective, we offer the following financial services, each of which is specifically tailored to the unique lifestyle of the CF and the statistics being provided are for the year ending 2008.

First, for the long-term disability plan including the rehab program, we have 95,000 members covered. On the term life insurance side, 133,000 members are covered. On the SISIP term life insurance plan, we pay claims even if someone dies while serving in an operational theatre, such as Afghanistan.

In 2009, SISIP Affairs paid $10 million for reinsurance coverage. This cost has not been passed on to members. Therefore, this reinsurance is very expensive. We have to go in the market to secure this level of insurance. Now, we are exploring other options, such as a government backstop and alternative reinsurance sources with more favourable rates.

Regarding the accidental dismemberment insurance plan for service-attributable dismemberment, we have paid over $7.4 million since inception to 35 claimants. We provide comprehensive financial planning, including advice and investment products through 55,400 clients. We provide financial counselling by providing free advice and assistance in the resolution of financial difficulties. Last year we assisted over 5,000 members.

In terms of the Canadian Forces Personnel Assistance Fund providing financial assistance through loans and grants, 4,000 members were provided with over $12 million in financial assistance through loans and grants. Finally, there is the Personnel Financial Education Program providing various personal finance courses through formal CF training programs to recruits, officer cadets and junior and senior NCMs. Over 10,000 CF members were educated last year.

[ Translation ]

As a division of the Canadian Forces Personnel and Family Support Services, SISIP Financial Services enhances the quality of life of the military community and the operational effectiveness of the Canadian Forces.

[ English ]

This concludes my remarks. I trust I have provided the committee with sufficient background on SISIP Financial Services related topics, and I will be pleased to answer any of your questions.

The Chair: Mr. Bouchard, could you clarify for me the second-to-last bullet — assistance fund that provides financial assistance through loans and grants? Is that at regular commercial rates or at favourable rates?

Mr. Bouchard: It is at very favourable rates. This program is administered through SISIP Financial Services. In some cases, we have the small loans, the self-improvement loans, which have rates of around 4 per cent. We have the distress loans at rates of 2 per cent.

When we look specifically at financial distress, we are dealing with Canadian Forces members and families that have extremely difficult financial situations. They cannot go to a bank or financial institution to get loans to improve their financial situation, so the SIFPAF is the last resort. We will provide loans up to $25,000 for those extreme financial distress situations. We also provide grants that are not reimbursable to an amount of $5,000, but the rates to members are very favourable.

Senator Wallin: Just a small point of clarification because it is complicated for everyone to understand how all of this interacts. Mr. Bouchard, this has been around since 1969, but now would you call yourself integrated into the Joint Personnel Services Unit?

Brig-Gen. Martin: I will provide a bit of overview first. Within my organization, I have a number of divisions; SISIP is one of the divisions that provide financial services. I have a public side to the organization and a non-public side.

The non-public is under the responsibility of the Chief of the Defence Staff, and operates more or less on a co-op type basis for the members' benefit. We generate funds through SISIP and CANEX, our retail operation, and turn those back into programs and services.

Sometimes funds like SIFPAF can be used, but we have others that can also apply. There is a variety of tools and mechanisms, all under what we call director general personnel and family support services. SISIP is part of that, and I work for the Chief of the Defence Staff, through the Chief of Military Personnel.

Senator Wallin: In terms of deciding where the serving officer, veteran or soon-to-be veteran goes, that decision is made here and then you can put them into one of the streams, is that right?

Brig.-Gen. Martin: While a member is serving, he or she will have access to a variety of programs — insurance and so on. If they are injured or become ill and are moved into the joint personnel support unit, that unit will then manage the plan for that individual, including drawing on and connecting with all of the appropriate support agencies for transition either back in or out.

That includes SISIP. It would include other elements of my organization like military family resource centres. It would include connecting with Veterans Affairs. It depends at what point we are talking about with respect to the individual's circumstances.

Certainly, coming into the forces, we would get financial education. Everyone going through recruit training or as an officer cadet gets an initial financial education, also provided by SISIP. This program is continuous while you are serving and then kicks in with other programs as you transition either to Veterans Affairs or out into civilian life.

Senator Wallin: This gets back to where we left off last week. I do not know whether we want to go there now or whether there are specific questions about SISIP. However, I would like to broaden this out to the options facing a soldier who is leaving, either voluntarily or involuntarily, and how that discussion is then held about whether they stay in JPSU as part of a unit, whether they have access to the lump sum or whether they discuss pension and the variations on the pension.

I do not even know where to start on this. I know there are different options on the lump sum payment, so can we look at that now?

Walk us through the choices. It is not as though one must take this or that, but tell us how it works.

Brian Ferguson, Senior Assistant Deputy Minister Policy, Programmes and Partnerships, Veterans Affairs Canada: I will try to broaden the question, if I may, for the benefit of the committee. I hope I do not appear to be long-winded about this, but it is important to get before the committee the rationale for the New Veterans Charter, which compares the choices members had before the Charter came in with choices they now have.

The choice before the New Veterans Charter was that you could apply for a disability pension. You could actually apply for it while still serving and receive it. If you got that pension, you would continue to have a monthly payment. You could also obtain health treatment benefits from Veterans Affairs related to the pension condition, and if you were seriously enough injured, other supports. Basically, that was it.

Veterans Affairs was faced with a large number of individuals who were not transitioning to civilian life successfully because with those choices, you ended up with a pension that was simply not enough to re-establish you in civilian life. You would be sitting at home waiting for that monthly cheque to come in, but not getting anywhere with your life. That was the situation we faced.

The New Veterans Charter brought in a major change; it built it on wellness principles and built a comprehensive package. The pension was replaced with a disability award, which was a lump sum award graded over the severity of the disability at the time, up to $250,000. It has been indexed since and is indexed every year; I believe it is in the range of $260,000 now.

However, that disability award is only one part of the picture. The other part is very important, which is that an individual who leaves the forces can come to the department without receiving a disability award. In the previous system, you had to come to the department to get a pension even to get treatment benefits and that sometimes took several months.

In the new system, they do not have to come to the department to get a disability award; but they are entitled to apply for one and receive one while still in the forces, so some people do that. If they come to the department with a re- establishment need based on their service, they are entitled to a comprehensive suite of rehabilitation programming.

That comprehensive suite consists of medical, psycho-social and vocational rehab. We have an arrangement with SISIP where we work together on vocational rehab if people are coming out on that side of SISIP. We have a working arrangement where our psycho-social and medical rehab is connected in as necessary with that world; but if someone needs more than the two years of SISIP to complete their vocational rehab, that is available under the New Veterans Charter.

While they are on this comprehensive rehab approach, which does not require a gateway — you can come to the department — you are covered for your earnings loss. The earnings loss is based on the SISIP formula for equity of 75 per cent of your pre-release salary. That 75 per cent is indexed.

If the individual is very seriously injured and can never work again, that individual will receive that 75 per cent indexed until they turn 65. At that point, they also will receive 2 per cent of what they would have been paid over that period as a lump sum as a replacement for the lack of ability to contribute to an RRSP or other plan.

If the individual is killed in action, the surviving spouse will receive that 75 per cent until the member would have turned 65, so that no one can say that Canada has benefited financially through the death of a soldier. That is a very important point.

A permanent incapacity allowance is paid to severely injured individuals in recognition of the fact that their entry into the workforce might be intermittent. For every member of the forces, whether injured or not, a job placement program is available. All members can avail themselves of counselling from a job placement firm, which we have under contract, including helping members prepare résumés, et cetera. This comprehensive suite of services requires participation. Under Mr. Hillier's direction and leadership, his team requires that individuals receiving rehabilitation sign a contract. Individuals' expectations of rehab are noted and those plans are followed when working with them.

Senator Downe: I noticed that you set up advisory groups after the New Veterans Charter came in. Your presentation material indicates that the final report has been received from the New Veterans Charter Advisory Group. Has the NVCAG been disbanded?

Mr. Ferguson: Although the group has completed its work, it has not been officially disbanded because we are still meeting with them to dialogue on some of their proposals and to provide departmental reactions to them.

Senator Downe: Has that report been made public?

Mr. Ferguson: The report is public in the sense that we have received it. We will make it available to the committee. It has not been made available yet because we want to ensure that the translated copy is of the same high quality as the version we received in the other language. That should be done within the next week or so.

Senator Downe: I see that one of the many concerns was ensuring financial security. That problem was identified by the Special Needs Advisory Group, which submitted a report in January 2009. Has that been translated and released?

Mr. Ferguson: No, but we can make that available to the committee as well.

Senator Downe: You talked about a suite of services. I will refer to this then as a menu. In Australia, military personnel are offered an option for the disability award. They can take the lump sum payment or pension payments or a combination of the two. Obviously, the lump sum payment would be reduced and pensions would continue on a regular basis until ended. Has the department considered that option? If they rejected it, why?

Mr. Ferguson: We considered that option. Based on Mr. Bouchard's earlier comment about modern disability management principles, there was a strong argument from academics and practitioners alike that cutting the dependency with the pension payments was critical in getting individuals to focus on the rehab plan. The experience was that people were overly fixated on trying to get an additional amount for a pension. That was the underlying rationale. Of course, it is proving to be the case based on our experience.

I should mention that Australia has studied a number of programs since they introduced their changes. A document in a review carried out recently by the Australian Department of Veterans Affairs stated that the New Veterans Charter in Canada is the closest to a wellness approach of the systems that they reviewed because it is based on enabling and rewarding a return to the best life possible. Even though they have a legislative package, they still made that comment.

Senator Downe: Regarding the lump sum payment, how many recipients or dependents have requested additional funds?

Mr. Ferguson: I cannot answer that, although Mr. Hillier might have that information.

Senator Downe: You were not aware of any at last week's meeting.

Mr. Hillier: I am still not aware of any. My answer of last week still stands.

Senator Downe: Will you confirm that?

Mr. Hillier: I am speaking from my experience. I have been in this job for 18 months and have never been made aware one situation where people have come back for more. Whether there has been a discussion between a particular case manager and a client, I could not specify. I have 2,200 people across the country.

Senator Downe: Could you determine how many recipients of the lump sum disability award or the death benefit filed a complaint with the department about either benefit? Could you obtain that number for the committee?

Mr. Ferguson: Yes, we could get that number. I testified last week before the committee of the House of Commons that I would look into getting some statistics on complaints. We are looking at that.

I do not want to mislead the committee but it is my impression that the number is small. Most of the complaints coming into the department continue to be about previous programs that existed before the New Veterans Charter, such as the Pension Act.

Senator Downe: I look forward to having that information.

Mr. Ferguson: We will provide it.

Colonel Gérard J. Blais, Director, Casualty Support Management (DCSM), National Defence: If I may, as commanding officer for many of the seriously injured, I have heard concerns raised with regard to the lump sum payment or the earnings loss. When they receive the lump sum payment, many feel that it is not enough for the simple reason that $250,000 does not go far. Of course, there is another suite of programs available but they are based on an individual's salary at the time they leave the Canadian Forces. A 25-year-old corporal who loses both legs might well have become a chief warrant officer in his career at a much higher salary. There is no way to account for that augmentation in salary that might have gone from $45,000 to $90,000 throughout the career. Veterans Affairs is looking at such situations. Those are the major concerns brought to my attention.

Mr. Ferguson: I will comment further should questions come along those lines because it is a very important point.

Senator Downe: Has the department done any financial analysis and could you table documents indicating whether the lump sum payment is a financial saving for the department over the long term? I appreciate that you will not have those documents with you.

Mr. Ferguson: Yes, we will provide any analysis that we can. I cannot indicate how long that would take, but the premise of the NVC is that it is not a savings to the department. There was a huge injection of government money at the front end.

Senator Downe: I understand and want to ensure that is the case.

My last question pertains to the work done by the Public Service Commission to assist spouses of Canadian military reservists, RCMP and bureaucrats who were killed on the job so that they would receive priority status for jobs in the federal government. The head of the Public Service Commission wrote us in May 2009 indicating that this was under way. I wrote a letter to the head of Public Service Commission in July 2009, and she responded to me on July 21, 2009, indicating that she hoped to have this finalized this fall.

To date there has been no action. Are the departments of Veterans Affairs and National Defence working on this? Have you heard from the Public Service Commission?

Col. Blais: The PSC is in the final stages of formalizing a program whereby the surviving spouses would be eligible for priority hiring. However, that would not apply to the spouses of those who are seriously injured.

Senator Downe: I understand that. Is it your understanding that they still hope to meet their fall timetable?

Col. Blais: They are very close. I do not think it would be enacted before Christmas, but they are hopeful that it will be in place before the end of the fiscal year.

Senator Dallaire: On a supplementary question, last week we asked you about the departments that were hiring on a priority basis. Unless I am mistaken, it seems to be only DND and Veterans Affairs who are hiring injured personnel on a priority basis. Will deputy ministers have the same prerogative in respect to spouses? Will their applications be accepted by departments on a similar priority basis?

Col. Blais: No, spouses of injured personnel but yes, for spouses of decreased personnel.

Senator Dallaire: Yes, what?

Col. Blais: They will have that prerogative.

[ Translation ]

Senator Dallaire: My question has to do with the deputy ministers. They have the authority to decide whether to give people priority or not. Two departments said "yes," but the others said "no" with respect to those who are injured.

Is it the same for the spouses of those who have been killed, meaning, the deputy ministers have the discretion to give them priority or not?

Col. Blais: I am not sure, but the legislation that is going to be passed will not apply just to the Canadian Forces. It will also apply to the RCMP and to all public servants; if a public servant dies in their office, for example, their spouse will also have the right to be hired, under this legislation.

Senator Dallaire: In any case, we would like the correct answer. Thank you.

[ English ]

Senator Downe: Following up on Senator Dallaire's comments, it is important that after this program is implemented by the Public Service Commission, that this committee monitor how many spouses are looking for priorities. If they all end up in one or two departments, then we know the other departments are not participating and we can pursue that at the time. I think we should pursue that with some vigour if that turns out to be the case.

Senator Dallaire: The point is that we have discovered that there are a number of people who could in fact join the public service, but they have no training in how to compete, so they do not know the parameters of competition. We do not provide a course or training in order for them to be competitive on a priority basis, even though they are on a priority basis, for a job. That is a dimension that is yet to be fulfilled, as far as I know.

Col. Blais: We will be in a better position to do that now with the Joint Personnel Support Unit, as we follow families beyond the death of the service member. We will remain in touch with families. If someone requires assistance, we will have staff and we will be happy to help them out with that.

Senator Day: Thank you, Mr. Hillier, for doing the research on exit interviews. The five or six thousand, in round figures should give you some comfort in knowing that 80 or 85 per cent are going through the exit interview. We will look forward to that figure going up, but that is a good start.

Mr. Ferguson, thank you for the background on before and after the charter came in. You spoke about a lump sum and then this suite of various services, and you also indicated that there is a possibility for disability benefits if the person has a reduction in salary, up to age 65, if that person is not able to work.

Mr. Ferguson: The earnings loss covers the individual in that case, up until they turn 65.

Senator Day: Then, presumably, other programs kick in, like Old Age Pension and the Canada Pension Plan?

Mr. Ferguson: That is correct.

Senator Day: That which is drawn by the individual who has a disability or is incapacitated, is that the long-term disability under SISIP or is that another program?

Mr. Bouchard: No, it is not. To give a bit of context with respect to SISIP LTD, the change that came about on December 1, 1999 was significant. It entitled any CF members who were personally released for a medical reason to the SISIP LTD benefit. Right now, any one released for a medical reason has an entitlement of up to 24 months of LTD benefits. We are there at the front, and this is the first piece.

We get involved in that process. We have a protocol with the Canadian Forces where we are informed of anyone who is being released, and then the process will kick in. Up to nine months before a member is released, the vocational rehabilitation counsellors will start working with that person to determine a suitable retraining plan in order to facilitate a return to full employment.

We know the member will be entitled to 24 months of benefit, and then vocational rehabilitation kicks in. We develop a plan, and if this plan is approved by a commanding officer, we can start the training up to six months before someone is released from the Canadian Forces. That plan can continue up to 24 months after the effective date of release. The intent is to have the vocational rehabilitation program completed within 30 months so that the person has the right set of skills to go back to gainful employment within the civilian workforce.

We have different markers when someone's disability will be assessed, at 12, 18 and 24 months. If someone is assessed as being totally disabled, they will continue on disability up to age 65. As Mr. Ferguson mentioned, this is not to say we work together with the program arrangement. There are suites of benefits we do not have that VAC offers, such as psychosocial. Depending on the program arrangement, we can piggyback with Veterans Affairs on different types of benefits.

We work with the serving member up to nine months before release and we take them through to the 24-month period. If someone is totally disabled, that person would contribute up to age 65. As Mr. Ferguson mentioned, the benefits are indexed for cost of living year after year. This is where we fit with the LTD.

Senator Day: Suppose at the end of the 24 months after release it is determined that the individual is only able to earn 50 per cent of what he was previously able to earn. Is there a SISIP long-term disability pension in that case or do we go to the Veterans Affairs program?

Mr. Bouchard: When we assess whether someone is totally disabled, the income that person can earn is also weighed in the final decision. If it is determined that that person cannot earn at least 66 2/3 of his or her salary at the time of release, that person will meet the definition of totally disabled and will continue with SISIP up to age 65. We have different markers. If someone has the skill sets to return to gainful employment and it is determined that this person is not totally disabled, then that person could be transferred over to VAC and they would be entitled to some of the benefits under the suite from VAC.

Senator Day: If they are able to earn up to 70 per cent, they are finished with SISIP and they go over to Veteran Affairs Canada?

Mr. Bouchard: If they can return to gainful employment, which is determined as 66 2/3 of salary at the time of release, and they do not have any other underlying medical condition that will render them totally disabled, they will be off claims at 24 months and they could possibly go over to VAC for other benefits.

Mr. Ferguson: There are people coming to our program who are SISIP participants and who are in psychosocial or medical rehabilitation programs to assist them as well. However, quite a large proportion of the people who come to us have exited the military without any clear indication at the time that they had an underlying medical condition, particularly psychosocial. Quite a large proportion of the successful claimants to this program have been of that type. I do not have the exact statistics here.

Mr. Hillier: Sixty-nine per cent of the participants we have in our program today are individuals who have been out of the Canadian Forces for a number of years. They are not immediate releases but people who have been out, in some cases, up to 10 years and are now coming back to take up the programs and services under the New Veterans Charter.

Senator Wallin: What you are saying is that there is no prohibition; if you had not accessed other programs earlier, you can come back 10 or 12 years later?

Mr. Ferguson: It is a comprehensive safety net in that regard.

Senator Dallaire: You talked about salary, but what if you have a reservist who is a student and is now disabled and cannot get gainful employment? What is the salary level for that person?

Mr. Bouchard: With respect to reservists, we are using the salary of a senior private as a benchmark. I do not have the exact salary, but it is well over $3,000 dollars. That is the base salary that is used and that would be the benchmark for assessing a claim.

Senator Dallaire: And if the reservist is of a higher rank than a private?

Mr. Bouchard: It would be the members salary at the time of release. If that member is released as a master corporal, the commensurate salary would be used.

I failed to mention something with respect to SISIP LTD. I mentioned that anyone who is released from the Canadian Forces for medical reasons has an entitlement, but anyone already released who believes that they have a medical condition that would entitle them to SISIP LTD can also submit a claim, and that claim will be adjudicated as such. It is possible that those members will become claimants. Essentially, SISIP LTD is a safety net for people who are released for medical conditions because they can no longer be a soldier and for anyone released for other conditions that they believe qualify them for SISIP LTD.

Senator Dallaire: Beyond the two years?

Mr. Bouchard: Yes. The ones who are not medical releases would be assessed under different definitions. The ones who are medically released have an automatic entitlement period of two years. The others must qualify under a more stringent definition of disability, namely, under "total disability." If they qualify, in all likelihood, they would become claimants up to age 65.

As was mentioned by VAC, we take people sometimes who have served in operational theatres 10 or 15 years ago. Sometimes, they have operational stress injuries such as PTSD, post traumatic stress disorder. They can submit a claim to us and they can also submit a claim to VAC. However, if they submit a claim to us and we believe that their condition prevented them from submitting a claim earlier, then they could become claimants and we will pay them retroactively to their date of release. For example, if someone submitted an application for a release that occurred 10 years ago, we will go back 10 years and pay them retroactively.

Senator Day: Is the long-term disability coverage under SISIP optional or mandatory for serving personnel?

Mr. Bouchard: It is mandatory for all serving members, including members of the reserves.

Senator Day: Some of the SISIP programs are optional but this one is mandatory for all military personnel?

Mr. Bouchard: That is correct.

Senator Day: I would like to understand a bit better, Mr. Bouchard, your table at page 2 of your presentation. It jumped out at me that, before April 1, 2009, the premium was 1.4 per cent per thousand and then jumped to 3.81 per cent. Is that a solely SISIP's decision? That is a significant increase.

Mr. Bouchard: We do not make those types of decisions on our own. The SISIP LTD plan is an insurance plan. This program is experience rated. It is based on the number of claimants and different elements within the processing structure that will dictate if a recommendation for a price increase will take place.

To explain the increase from 1.4 per cent to 3.1 per cent, in any given year the plan typically experiences about 1,000 new participants. However, 2008 was an odd year where the numbers of people released for medical reasons jumped to close to 1,600. This had a significant impact on the pricing. We have been talking a bit about the monthly Pension Benefits Act. As was mentioned during the Senate meeting last week, with the enactment of the charter in 2006, the monthly Pension Benefits Act is no longer being paid. The disability award is being paid as a lump sum payment. It is not off set against SISIP LTD or the program under Veterans Affairs Canada. The monthly pension benefit — and, it is still an offset today but was more so in 2006 — impacted on the level of premium that was charged to the Government of Canada for that plan.

With the elimination of the monthly Pension Benefits Act, as we go prospectively there are fewer members who come under the SISIP LTD plan with a monthly Pension Benefits Act as an offset. The elimination of this offset prospectively has about $30 million per year in the structure. This is why you see an increase from 1.4 per cent to 3.1 per cent. That is a combination of the experience of this plan with respect to claimants and the loss at the point where no new claims will have pension plan offset. It is a combination of two things: The $30 million, no more offset, and the experience of plan.

We have annual meetings with officials from Treasury Board to review the price structure, usually in September. It is all done by actuaries. A presentation is made and then actuaries from Manulife, in combination with OSFI, will make a determination that the recommendation being made by Manulife is the right recommendation. If there is a need to go before Treasury Board for an increase, as we did the last time, then that will occur. If the payment structure is adequate for the ongoing claims, there is no recommendation to increase premiums.

Senator Day: Mr. Bouchard, you have given us a figure back to October 27, 2000, when Bill C-41 was enacted, of $270 million to look after the 4,000-plus claimants who had a clawback. Do you have an estimate of the cost going back to 1985?

Mr. Bouchard: Essentially, the objective is to go back to 1985, as I indicated in my remarks. Presently, we can only go to 1991 with the database that we have. Between 1985 and 1991, it will involve manual extraction from Manulife's system. The amount suggested should we have to go back to 1985 is $500 million.

Senator Downe: I have a brief supplementary question on the increase in the premium. Why is the government not self-insuring this program? Why are we using a private company?

Mr. Bouchard: Are you talking about the SISIP LTD or the insurance?

Senator Downe: Yes, the one where we are using Manulife.

Mr. Bouchard: The SISIP LTD is an insurance program. You need an insurance company to deliver the program. SISIP is the administrator of this plan. Manulife bid for this program years ago, when they were Maritime Life. They are the insurer of record and they have to administer all the claims and set up the reserves for the ongoing payments of claims. Similarly, the other disability insurance program of the government applies the same principle. They will use Sun Life, Great-West Life and other companies to deliver those elements.

Senator Downe: The government has determined that it is cheaper to do this than to self insure, which they do in other parts of government, is that correct?

Mr. Bouchard: On this one it is not self-insuring, it is to have enough money set up in the reserve to ensure ongoing payment for the life of those claims. Based on experience, it involves the right amount of premiums required to sustain the life of those claims. It is not reinsurance but, being experience rated, they have to ensure the company does not run into a deficit situation. These are the premises that Treasury Board of Canada is using by using an insurance company to deliver the program.

Brig.-Gen. Martin: Additionally, the LTD provides a number of services. It provides vocational rehab and a safety net for a salary while under the program. You have to administer and deliver that program. SISIP, the insurance program we have, has been in place for 40 years. Over those 40 years, I think it has improved and certainly changed and evolved. It is efficient, effective and responsive. Using the insurer the way that we do, overseeing it in-house for SISIP connects it to the needs of the Canadian Forces and, in my view, fulfills that role very well. That is why we have that insurance in place. It does mirror workers' compensation and other schemes in government and with the RCMP, and provides members that long-term disability insurance for those who are medically releasing, the two-year benefit, and for those who are fully disabled, to age 65.

It is that safety net for our folks, and it is an effective and efficient way to do it, in my view.

Senator Dallaire: The plan is efficient because, whereas before veterans received services only if they were serving in a special duty area, it covers everyone, whether you are injured in a special duty area or walking across the street; in other words, those elements that were not considered to be under the purview of Veterans Affairs. That is why we brought it in as a workmen's compensation exercise for everybody and not a veterans benefit. Am I right in saying that the special duty concept is now finished and no longer the only factor for compensation; in other words, for those who are injured in operations or in training for operations?

Mr. Ferguson: There is an impact on Veterans Affairs and on DND. Maybe the DND side should answer first.

Col. Blais: The concept still exists. The special duty areas and operations are still declared, because it goes beyond just a service-related injury. If a person develops an illness there, whether it is related to that operation or not, then it will be considered to be service-related, and if it was not, then Veterans Affairs would not be in a position to provide benefits.

Mr. Ferguson: To confirm, we do use the concept of special duty area or special duty operations for that purpose. It means you are covered 24/7 in that theatre, whereas at home you are covered in a workmen's compensation environment.

Senator Dallaire: Was that not clarified to include the optional training phase in preparation also?

Col. Blais: Yes.

Senator Dallaire: They can be committed to an operational theatre as much as a year ahead of time, particularly reservists, who sometimes come in a year before they actually deploy.

Col. Blais: When they are on operation-specific training, they are covered.

[ Translation ]

Senator Dallaire: Mr. Bouchard, I find it completely demoralizing to troops that the government is appealing the decision before the Supreme Court. The philosophy behind the new charter conflicts with that debate.

Since the Supreme Court will rule on the matter, there is nothing we can do. That is my opinion.

[ English ]

May I go to Mr. Ferguson, and specifically the Westmoreland group, the NVCAG. We were told by a previous witness that the report has been ready since May or June and is being held up not because of translation but because we are fiddling with the content. I am being open here because that is what we heard. Can you give us a better feel for that?

Mr. Ferguson: I can set the record straight on that one. The report was provided to us in draft form sometime during the summer, and the committee insisted that the department fact-check the full report. The committee did not want — and I am putting words in their mouth here — the report to contain any errors of fact. They asked the department to go back and check any substantive factual statements. That took a bit of time because some of the stuff is a bit complicated. However, as of October 1, we have their final report. That was the rationale.

Senator Dallaire: Why would you not want to keep that advisory board as an internal instrument for senior management? The title of your presentation is in fact "A Living Charter." Would it not be a useful tool for you?

Mr. Ferguson: It is considered a useful tool. We are looking at some options now for advisory committees for the future. If you look at the age profile of veterans in Canada, as we look ahead, the Department of Veterans Affairs historically has followed about a million soldiers, sailors and airmen home to Canada and adjusted the programming as they aged through the life cycle. With that clump of individuals, the programming was changed; the Veterans Independence Program came in, and we found that because of that we did not have the programming for the younger veterans that were required under the New Veterans Charter. However, if we look ahead post the traditional veterans group, we see an age cohort that is spread more evenly across age. Every 10 years there will be roughly the same number of veterans in each category. Rather than dividing our advisory groups into the people who advise us on geriatrics versus those who advise us on younger people, we are looking at merging them for the continuum of life.

Senator Dallaire: That is brilliant, in as much as you are giving an estimate that you will be in business with a new generation veterans for years to come because we will continue to be in operations, and the scale that we are doing now is not very high at 2,500 out there and maybe with a few others, 2,700 to 3,000, but that could increase and the demand could still continue.

Mr. Ferguson: Not only for that reason, if I may, and Mr. Hillier might have better numbers, but there are somewhere in the order of 700,000 to 800,000 veterans in Canada. There are 500,000 or 600,000 veterans post-Second World War who are Canadian veterans. They have a right, if they so qualify, to come to the department. We are looking at that demographic as well in making some of our projections.

Senator Dallaire: That is only if they got injured in special duty areas, and there were not many of those over the last 40 years, until at least into the 1990s.

Mr. Hillier: You are quite right in making reference to the special duty area, but as we all know, sometimes it is many years afterwards before people come forward. Today, as of September 30, we had 60,000 modern-day veterans who are clients of the Department of Veteran Affairs, a client being someone in receipt of a benefit or service from the department.

As we look at the demographics in future years, we have these advisory committees to help us understand what types of injuries we may see coming forward and what the delay may be for some of them. For some types of injuries it could be six to seven years before a client comes forward. Going to the question of Senator Wallin, there is no time limit for coming back. As Mr. Ferguson has noted, we have this broader base of advisory groups looking at the continuum, because my oldest client is 109 years old and my youngest is 20 years old.

Senator Dallaire: This keeps the emphasis on the outreach of Veterans Affairs. This brings me to the New Veterans Charter evaluation plan that you have produced. The essence of what we are trying to do is in this document that I got yesterday, late. I believe it was presented in the House of Commons last week, was it not?

Mr. Ferguson: It was tabled there, senator.

Senator Dallaire: In fact, we got it at the same time we got your presentation.

In that regard, I am not sure whether Veterans Affairs was keen on getting out information about how the thing was progressing, nor whether either the ATIs or committees have actually brought forward a requirement to tell the troops. I read Salute! and so on but there has been little mention of this significant exercise — which, may I say, is very well done. I have a few questions on it, but it is significant. I do not know what MBA gang did this, but it is well done.

I get the feeling that information on how we are doing so far was not necessarily forthcoming, and I wonder whether that has attracted some negative response.

Mr. Ferguson: We recognize communication is really at the hallmark of getting the message out. I will ask Mr. Hillier to speak on what we are doing on outreach. To clarify, there is no hesitation in evaluating the charter. We have the evaluation plan under way. The advisory groups are there to help us evaluate the charter. They are constantly telling us what they think. We probably do not have time to go into that today, but I understand they are coming back to see you later. I am sure they will have lots of useful insights into areas that need improvement.

I do not want to leave the impression that we have the perfect solution here. Maybe Mr. Hillier can talk about this.

Senator Dallaire: I would like to ask one last question.

In reviewing the evaluation plan, which I have been able to do, I would like to bring your attention to two groups, namely, the families and the reservists. Although we see stuff on it, I do not know how far you want to go in regard to support to the families.

My concept is that, ultimately, we make the families direct beneficiaries of Veterans Affairs, not just the member. That would be the ultimate, instead of throwing them into the wilds of the provincial systems. I do not know whether the evaluation is being written with that potential level of support.

How will you get data on the reservists? Will you go to the reserve units and not just the big bases? Will you go from your districts into, for example, Matane where you do not have a district and get data from reservists who are scattered around there? They are significantly under-supported by the system.

Mr. Ferguson: On the evaluation question, I will take that back to the lead evaluators in the department and bring your suggestion to them. We will get feedback to you on how we will address those very important issues you raise.

Mr. Hillier: I would like to respond to the issue about the evaluation. A part of the evaluation that is very important, I believe, is not how we think we are doing. Part of the evaluation will involve interviewing individuals who have gone through transition to find out how we did. We will get it from the perspective of the client as opposed to the perspective of those delivering the services.

Senator Wallin: I have a couple of little points for Colonel Blais. Regarding the take-up in the departments for either disabled members or their spouses, my impression from having talked to them, is that most of them want to be in DND or VAC. They are not applying at Health Canada or the tax department.

Col. Blais: For the most part, that is true.

Senator Wallin: They are looking for a family connection.

Just to be clear on the record, because it has been a misapprehension, it is not the lump sum or something else. There is a suite of programs even if you opt to go that way.

Col. Blais: Yes.

The Chair: You just said, Mr. Hillier, that you will be asking the clients how they evaluate. Is that in 2010-11, the case management evaluation, I see referenced in this document?

Mr. Hillier: No, it is not. So we do not duplicate, it is part of the evaluation that Senator Dallaire has done. It will be one comprehensive evaluation, and the clients will be interviewed to get their input, which, obviously, will have impact in terms of policy and service delivery.

The Chair: When will that begin?

Mr. Hillier: The evaluation has already started. I do not know off the top of my head, but I would be happy to provide when those interviews will take place. This evaluation is taking place over a period of time, but it has started.

Senator Dallaire: Maybe we can get an answer after each phase.

Mr. Hillier: Certainly.

The Chair: I want to ex-express the appreciation of the subcommittee for your attendance. It has been a particularly helpful meeting today, and we have a lot of material on the table. I think we all have a clearer picture.

I have some sympathy for the member of CF who is leaving and is faced with this array of programs, and I hope there is someone who has the time, patience and skill set to take them through the myriad of options available to them and give them good counsel.

Colleagues, next week, our witnesses will be Major-General Semianiw, Chief Military Personnel and Ms. Muriel Westmoreland, who is the chair of the advisory group.

In connection with the advisory group, as you know we are trying to get the report out to you before she appears next week, but we do not know whether it will be translated in time. The report is available in the clerk's office but in the English language only. Should you wish a copy, please phone her and she will be glad to give you one, but I cannot distribute it officially at this stage.

Unless there is anything else from any of our members, I declare the meeting adjourned.

(The committee adjourned.)

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