I meant the general ability to offset cppd is not grey.
The majority of LTD contracts use the term “gross amounts” that alleviate the legla question about pre or post tax. Most are also clear on whether government sponsored benefits offsets can be increased if the benefit increased.
That said, I totally agree that when a LTD contract is worded poorly on a subject it introduces a grey area. The definition of gainful employment is another one, that the courts have defined in the common law when aLTD contract is silent on the matter.
I’m not sure you understand what the 65(3) exception does. It’s just allows the insurer to garnish your CPP-D directly from Service Canada.
Let’s imagine a world where you fought to get 65(3) completely removed from the CPP Act and won. No longer would an insurer be able to go directly to Service Canada show them your LTD contract and say we want to garnish their retro and future CPP-D payments.
However in that scenario you still have the legal obligation to directly pay your insurer any amounts that you get from CPP-D as all LTD contracts state “We will reduce our payment to you by the amount of CPP you receive.” Eliminating 65(3) does not prevent your LTD from being reduced by the amount you were approved for by CPP-D. Any retro amounts then become a past overpayment which contractually you are required to pay back as that is agreement you signed onto when you accepted your LTD insurance policy.
Thank you for the explanation.Let’s try to get to a place of common understanding.Would you agree on these basic facts?
CPP is a pension, not a policy of insurance.
There is one CPP — funded by the same contributions from workers and employers.
Eligibility can be triggered through retirement or disability, but it is the same earned pension.
The Act says the pension “shall” be paid once eligibility requirements are met.
From the perspective of an ordinary person reading subsection 65(3):
The term “administrator of a disability income program” is not defined anywhere in the Canada Pension Plan Act.
There are no statutory criteria for who gets approved or what “approval by the Minister” actually requires.
How would we even know if a particular “administrator” has been approved?
Does the approval process exclude entities that already have a financial obligation to pay?
The phrase “would not have been made” is doing a lot of work in that section. Does it include situations where the entity simply does not want to pay because of an offset clause they wrote themselves? Does this effectively transform an earned contributory pension into a private-sector subsidy?
So it really doesn’t matter if I agree with the basic facts you have presented or not as they are irrelevant to insurance clawing back LTD once CPP-D is approved.
Let me try to explain further. I think you’re getting hung up on the vague nuances within 65(3) and the Pension Act that do not prevent a person from creating a personal commitment to an insurance company to have their LTD reduced by an amount equivalent to what their CPP-D is.
In other words, (A) insurance companies ARE NOT taking your CPP-D, but are (B) reducing your LTD payments (including retroactivley) to an equivalent amount of what your CPP-D payments are as per your private agreement with them.
What is hard for many to get their heads wrapped around is that there is a huge legal difference between (A) and (B), and it’s not just symantics.
Life exists in the spaces between responses I have read your response, I’m looking at this issue from the perspective of CPP as a federal contributory pension funded by mandatory individual contributions, rather than purely through a provincial insurance/contract lens. A few questions i have been pondering:
In the event of a conflict between a private insurance contract and the Canada Pension Plan contract, which takes precedence? Can a contractual term in a insurance policy lawfully require the ongoing redirection of a federal statutory pension?
Has any court directly considered whether section 65(3) of the Canada Pension Plan Act and the associated agreement/consent forms authorize ongoing monthly offsets by private insurers? Or has this practice developed primarily through administrative agreements without meaningful judicial scrutiny?
Given that CPP Disability is an earned pension created through mandatory contributions from a worker’s earnings, on what basis can a private insurer treat it as an offset or overpayment in the same way as benefits from another insurance policy?
It seems like you have fallen into the trap of thinking a LTD clawback/offset due to being approved for CPP-D is the same thing as a CPP-D redirection. They are not the same thing.
To answer your questions.
No private insurance plan can override statutory laws, that said there is no current conflict between them. A ltd claw back/offset is not a redirection of cpp-d.
As far as I know, no one has yet to come up with any good reasoning for the courts to examine this. I know I have yet to hear any good reasons for the courts to get involved, so I’d imagine no lawyer would ever spend any time on it.
On the basis you contractually agreed to a reduced LTD payment in the event you are approved for any government sponsored benefits. There are no statutory laws that prohibits this.
Are you aware that contracts don’t even have to be ‘fair’? The basis of your pleading revolves around this premise and this premise is incorrect. Buckets et al have given you far more time and energy than I have or will, but you will lose this battle that you seem so intent on fighting.
I understand the distinction you’re making, but I don’t think it fully addresses how this system actually works in practice.While the insurer technically reduces its own LTD payments, that reduction only operates the way it does because of federal government involvement.
This is not a simple contractual deduction between two private parties. Insurers must formally apply to the federal Minister to become approved administrators under section 65(3) of the Canada Pension Plan Act. Once approved through these administrative agreements, and once the contributor signs the irrevocable consent form (often without full explanation of its consequences), the government is authorized to repay the insurer — but only as a one-time payment.
This is more than a provincial contract issue. CPP Disability is a federal contributory pension created through mandatory contributions from a worker’s own earnings. It belongs to the people who paid into it.The real question isn’t whether a private contract can reduce LTD payments. It’s whether section 65(3) — which on its face only authorizes a one-time payment for temporary overlapping periods — was ever intended to support ongoing monthly offsets of a federal contributory pension by private insurers.
You mentioned that no court has examined this. That may be true, but the absence of judicial scrutiny doesn’t mean the current practice is clearly lawful. It may simply mean the issue hasn’t been properly tested yet.I appreciate the discussion.
I’m not arguing that private contracts have to be fair. That’s not my position.
My questions relate to whether a federal statutory pension — funded by mandatory contributions from workers’ earnings — can be redirected on an ongoing basis through section 65(3), consent forms, and administrative agreements between the Minister and private plans.This is more than a provincial contract issue. CPP is a federal contributory pension created through mandatory contributions from a worker’s own earnings. It belongs to the people who paid into it.
If this logic is accepted — that private plans can reduce their obligations by accessing CPP Disability through section 65(3) and undisclosed agreements — then what stops the same approach from being applied through 65(2) to CPP Retirement benefits?
Could employer or provincial retirement plans begin offsetting CPP-R on the basis of “sustainability” or coordination?
To be blunt, your response shows that you don’t actually understand the distinction. The reduction operates the way it does based on the private insurance contract you have agreed to partake in, and has nothing to do with the federal government at all.
For some reason you think 65(3) is what allows the clawback/offset, it’ definitely is not. It’s only your private insurance contract that makes the clawback and offsetting legal.
Again as per a previous comment I made 65(3) just allows the insurer to streamline the process of getting retro cpp-d payments. It allows them to get any retro lump sum amounts directly from Service Canada instead of jumping through hoops to get it from you directly. Current and future offsets of equivalent CPP-D amounts have absolutely nothing to do with 65(3) or the pension act.
To be honest, it sort of feels like I am hitting my head against the wall. You’ve zoomed in and can’t see the larger and legally sound framework. So this will be my last response on this topic.
I understand you believe the offset operates entirely separately from section 65(3), but I don’t agree.While the insurance contract creates the right to offset, the practical mechanism that allows insurers to receive CPP Disability payments — including retroactive lump sums — directly from Service Canada relies on section 65(3), the Irrevocable Consent form (ISP-1618-A), and the administrative agreements between the Minister and insurers. Without this federal process, the offset would not function as automatically or as seamlessly as it currently does.You mentioned that section 65(3) only deals with retroactive payments. Even if that was the original intent, in practice it has been used — through consent forms and administrative agreements — to facilitate ongoing monthly offsets of a federal contributory pension. That’s the core issue.I also want to briefly address the discrimination point. In cases like Reilly v. Ford Motor Company, the courts have often used the wrong comparator groups. The proper comparison should be between those who receive CPP through the retirement path versus those who receive it through the disability path. Under many policies, CPP received at retirement is added to wage replacement benefits, while CPP received through disability is deducted. Since both paths draw from the same contributory pension, this differential treatment raises legitimate questions about fairness and discrimination.My goal here is simply to engage in discussion. Participation is always by choice.Thank you for your responses.
CPP creates one pension with two different paths to eligibility — retirement and disability. Both paths are funded by the same mandatory contributions and protected by the same statute. However, in 1996 the Auditor General introduced the term “first payer” in an effort to reduce costs. This concept does not exist in the Canada Pension Plan Act.By labelling CPP Disability as a “first payer,” the pension was reframed as a needs-based benefit rather than an earned statutory right. The logic was that if a disabled contributor had private insurance, they didn’t truly “need” their CPP pension. This single administrative shift removed the safety net protection that applies to retirement pensions and transformed an earned benefit into a subsidy for private insurers.This was done, in part, to help keep premiums lower for employers and workers. An earned pension, guaranteed by statute, was effectively converted into a financial advantage for the insurance industry rather than the contributor who paid into the plan.This differential treatment — protecting the pension when received through retirement but treating it as a cost-recovery tool when received through disability — is the core of the problem. It is ableism in action: disabled contributors are held to a different, lesser standard than other contributors to the same plan. My goal is simply to engage in discussion.
I have read your response, I’m looking at this issue from the perspective of CPP as a federal contributory pension funded by mandatory individual contributions, rather than purely through a provincial insurance/contract lens. A few questions i have been pondering: