My situation is that I’m receiving CPP disability benefits and have Great West Life LTD through my employer. GWL has told me that I have been approved to age 65, so my expectation (and that of the guy that I spoke to) is that they don’t expect me to go back to work. Which is good because I really couldn’t, unfortunately.
I understand that any severance pay will not be deducted from LTD unless specifically stated in the policy, which I have yet to examine. Correct me if I’m wrong because I certainly am not a legal expert of any sort.
My question is, what’s the rule for CPP? If CPP is reduced dollar for dollar, it could result in a total discontinuation of CPP payments for between 2 and 3 years, so I’m trying to figure out if I should even ask my employer for severance.
Thanks in advance for any help,
NB- I did look at a similar question in the forum that was answered by David in July, but I’m not completely clear on whether it applies to my situation.
Hi, I may need you to clarify your question or maybe there was a typo. not sure what you mean by a discontinuation of CPP payments for between two and 3 years? Basically, it works like this. You policy will set out what can be deducted from your LTD payment. CPPD almost always deductible. Severance payments usually are, but it depends on the wording.
IF you have a period where both CPP and Severance where paid during the same months, then it is possible that LTD could owe nothing during those months. If they have already paid you for those months, then you could owe the money back to them.
It is very hard to generalize. You should be up front with your insurer and ask what is and isn’t deductible from their perspective. Most of the time they are correct and rarely would they ever intentionally mislead you. Sometimes there are gray areas open to interpretation, so they will obviously pick the interpretation that favours them.
Disability Lawyer with Resolute Legal
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Thanks for the quick reply, and I want to thank you for setting up this resource for people and for being available. I think this is really great.
Anyway, I shouldn’t have muddied the waters by mentioning GWL at all. My initial question was, more succinctly: Will CPP payments to me be discontinued for any severance pay amount? For example, If I were to get a lump sum $80k severance, and I get $$1k per month from CPP, will they (CPP) discontinue the payments completely for 80 months?
As for my insurer, I have confirmed that they do consider severance as employment income (they take it). So, there may be no point in my getting severance anyway. I’d rather my employer keep it than the insurer get it
Your CPP-D payments are not affected by any severance pay. You will continue receiving your CPP-D as usual no matter how much severance you receive. The only thing that can be affected is your LTD payments. LTD will be reduced if your policy says so. Otherwise not.
Cool, thanks for the info, Elaine!
I wonder if insurance can touch your severance if you roll it into an RRSP. It would not be income. Worth checking into.
That may be an avenue to look at…don’t know if it would work…but good idea
Thanks All, for the ideas.