FSCO Arbitrator Judith Killoran has ruled that child’s benefit payments under the Canada Pension Plan are not deductible from income replacement benefits.
In Blakely v. State Farm, the parties agreed that a CPP disability pension benefit ws deducted from the amount of the income replacement benefit under the SABS. However, they disagreed on what constitutes a “disability pension benefit.” The claimant submitted that only $852.30 monthly for 2011 should be attributed to her as a CPP disability pension benefit and therefore, that is the amount that meets the definition of a payment “for loss of income under an income continuation benefit plan” under subsection 2(9) of the SABS. The insurer submitted that the entire amount of the monthly disability benefit for 2011, which includes the child’s benefit, that is, $1,070.80, should be deducted from any income replacement benefits, if the claimant was found to be entitled.
The arbitrator found that the claimant’s CPP disability benefits were comprised of two distinct components: the disability pension benefit of $852.30 monthly in 2011 and the child’s benefit of $218.50 monthly in 2011. Consequently, she found that the correct interpretation of the SABS required that “payments of disability pension benefits under the Canada Pension Plan”, which in the case before her totalled $852.30 monthly, met the definition of “payments for loss of income under an income continuation benefit plan” and the child’s benefit of $218.50 monthly did not meet the definition.
Of note, the arbitrator distinguished the Ontario Court of Appeal’s decision in Ruffolo v. Sun Life, 2009 ONCA 274 (CanLII). The Court of Appeal agreed with the trial judge rgar the language of the group insurance policies permitted Sun Life to deduct the CPP child’s benefit from the monthly LTD benefit. The arbitrator held:
In the case before me, the integration section in question under the Schedule specifies that “payments for loss of income under an income continuation benefit plan shall be deemed to include the following payments: 1. Payments of disability pension benefits under the Canada Pension Plan.” The language is quite different in that the reference is to “payments of disability pension benefits” not to “disability benefits” or “disability income”. Relying on rules of statutory interpretation, I find that the word “pension” has been included for a reason. One reason is to distinguish the CPP disability pension benefit from the CPP child’s benefit.