Are CPP disability benefits deducted from my settlement?

Yes – your Canada Pension Plan (CPP) disability benefits will be deducted from any amount that you receive because you’re injured in a car accident. Additionally, many long-term disability policies also state that any CPP disability benefits will be an offset to the amount owed under the policy.

In January 2019, the Nova Scotia Court of Appeal released a decision outlining why CPP disability benefits will continue to be deducted from Motor Vehicle Accident (MVA) damages for loss of future income. The decision focused on the intent of the Nova Scotia legislature when they brought into effect s. 113A of the Insurance Act in 2003.

Section 113A of the Nova Scotia Insurance Act essentially states that any payments you are given to supplement your income loss from the accident are deducted from the damages you eventually receive.

Why is this being debated?

All MVA claims are civil claims. The objective of civil claims is to compensate you for your loss. The Supreme Court of Canada has stated that you should not be overcompensated for your injuries. Future income loss is difficult to predict, which is why these damages are so hotly debated.

It is not unusual for a person’s injuries to leave them unable to return to work for weeks, months, or even indefinitely. Shortly after their motor vehicle accident, you can apply for CPP disability benefits to replace the income lost from being unable to return to work.

The recent debate in Nova Scotia has surrounded whether the amount of CPP disability payments a person will receive in the future, which are intended to supplement lost income, should be deducted from the amount they receive for future loss of income. If the amount for CPP is not deducted, and you continue to receive CPP payments in addition to the future loss of income awarded, then you will theoretically be over-compensated.

Collateral benefits

Traditionally, CPP disability benefits were subject to the collateral benefits rule. The collateral benefits rule is that insurance benefits should not be deducted from remedies in a civil claim. It makes sense for this rule to be applied to CPP disability benefits because you would have been paying the premiums all along and should benefit as such.

Intent of the legislature

The intent of the Nova Scotia legislature when implementing s. 113A of the Insurance Act in 2003 was to modify the common law. The modification was implemented at a time when insurance premiums were escalating at an alarming rate. This section of the Insurance Act was intended to limit costs for insurers, in the interest of limiting the premiums they charged their customers.

The trial judge failed to consider the context of the implementation of the legislation. They looked at the words from a narrow perspective, not considering the overall intent of the legislature when implementing this section of the Insurance Act.

It is not up to the court to defy the intent of the legislature. Throughout Canada, the provincial governments have made attempts to limit increasing insurance premiums by legislating benefit limits. The deduction for CPP disability benefits is an example of one of these attempts.

At MacGillivray Law, we help victims across Canada pursue justice and fair compensation for their injuries sustained in a motor vehicle accident. If you’ve been injured in an accident and are unable to return to work, contact us today at 1-888-434-0398 for a free consultation.