Deduction of Disability Benefits under the Canada Pension Plan Policy 21-230 | Effective Date: December 12, 2023

Policy

Injured workers may receive WorkSafeNB benefits (regular loss of earnings or long-term disability) and disability benefits under the Canada Pension Plan (CPP) at the same time.

WorkSafeNB has a legislative obligation to reduce WorkSafeNB benefits when an injured worker begins to receive a CPP disability pension after the compensable injury or recurrence of the compensable injury. The reduction is by that proportion of the amount the worker receives under CPP that the estimated loss of earnings bears to the average net earnings, as determined by WorkSafeNB.

WorkSafeNB manages all types of disability benefits under the CPP in the same manner.

Interpretation

1. WorkSafeNB encourages injured workers to inquire into disability benefits under the CPP as soon as they become entitled to WorkSafeNB long-term disability benefits. Receiving disability benefits under CPP may be beneficial to the injured worker in the long term, as retirement benefits under the CPP are not impacted when injured workers receive these disability benefits, with entitlement continuing as if there was no break in the employment. However, if the injured worker continues to receive WorkSafeNB benefits for an extended period of time the retirement benefit under the CPP may be lower.

2. Injured workers are required to report their eligibility for disability benefits under the CPP to WorkSafeNB. Injured workers are also required to report any changes to their disability benefits under the CPP to WorkSafeNB.

3. Injured workers may continue to receive WorkSafeNB benefits while entitlement to disability benefits under the CPP is determined. This may take a long period of time and can result in an overpayment of WorkSafeNB benefits.

4. WorkSafeNB has a legislated obligation to reduce loss of earning benefits by a proportion of the gross amount the worker receives under CPP. The proportion is determined by calculating the percentage that the estimated loss of earnings bears to the average net earnings, as determined by WorkSafeNB. The disability benefit, provided under the CPP, is multiplied by this percentage to determine the amount deducted. The calculation is:

   Loss of Earnings Average Net Earnings

   X

   Gross   amount of Disability Pension   under the Canada Pension Plan

   =

   Reduction      in Loss      of    Earnings Amount

5. WorkSafeNB uses the same method to determine the proportion of disability benefits under CPP for both ongoing and retroactive payments.

6. Children’s benefits awarded to injured workers under the CPP are not included in the calculation of the amount to be deducted from the injured worker’s WorkSafeNB benefits.

7. Injured workers do not pay tax on loss of earnings benefits; however, they do pay tax on disability benefits under the CPP. To encourage injured workers to report disability benefits received under CPP immediately, WorkSafeNB may reimburse injured workers for an amount equal to the tax assessed on these retroactive disability benefits. WorkSafeNB is not responsible for any interest charges resulting from late payment of income taxes.

8. An injured worker may qualify for an income tax reimbursement if:

• The full amount of any overpayment owed to WorkSafeNB as a result of receiving disability benefits under the CPP is paid; and
• The injured worker provides the information necessary to determine and/or verify the amount of reimbursement.

9. When WorkSafeNB provides an income tax reimbursement the costs are charged to the same account to which related claim costs are allocated.

Previous Policies

• Policy 21-230 Deduction of Disability Benefits under the Canada Pension Plan, release 8, effective June 14, 2019
• Policy 21-230 Deduction of Disability Benefits under the Canada Pension Plan, release 7, effective May 26, 2016
• Policy 21-230 Deduction of Disability Benefits under the Canada Pension Plan, release 6, effective October 14, 2015