Deducting Commuted Permanent Disability Pensions
Effective date: August 1, 2016
Application: Claims described by Sections 72 and 76 on and after the effective date.
Policy subject: Annuities and pensions
To establish guidelines for deducting commuted permanent disability pensions from current entitlements.
Commutation means a lump sum payment that is made, either at the time when the permanent disability pension was first established or at a later date, in exchange for whole or part of the worker’s permanent disability pension.
- Section 72 of The Workers’ Compensation Act, 2013 (the “Act”) states “if an injured worker returns to full employment and afterwards suffers a recurrence of the injury, the compensation payable to the worker must be based on the positive difference, if any, of:
(a) the amount that is the greater of:
- the worker’s weekly earnings at the time of the commencement of the worker’s loss of earnings resulting from the injury when the injury was initially sustained; and
- the worker’s weekly earnings at the time of the worker’s loss of earnings resulting from the recurrence of the injury; and
- Section 76(3) of the Act states “this subsection and subsections (4) to (8) apply only to workers who:
(a) are receiving or are entitled to receive an award under any Workers’ Compensation Act in force before to January 1, 1980; and
(b) on January 1, 1983, were under the age of 65.”
- Section 76(4) of the Act states “the board shall:
(a) review the compensation being paid to each worker mentioned in subsection (3) to determine the difference between the adjusted earnings at the time of injury and the amount that the board estimates that the worker is capable of earning in suitable employment; and
(b) pay 75% of that difference determine pursuant to clause (a) to the worker until the earlier of:
- the date of the next review; and
- the date that the worker attains the age of 65.”
- Section 76(7) of the Act states “in determining the amount of compensation payable to a worker mentioned in subsection (3), the board shall:
(a) deduct the amount of the permanent award for disability; and
(b) determine, in accordance with Section 95, the reduction for any Canada Pension Plan benefits payable for the same injury.”
- The permanent award for disability noted in Section 76(7) of the Act is a monthly pension based on the worker’s disability rating.
- To determine the amount of compensation payable to a worker receiving earnings loss benefits under Sections 72 and 76 of the Act, the WCB will deduct the worker’s disability pension benefits payable under legislation for injuries occurring prior to January 1, 1980.
- Prior to 1985, where a worker’s disability pension was commuted, pension deductions occurring subsequent to the commutation were based on the current value of the pension as if it had not been commuted. This practice changed with the approval of Board Order 01/85, Deducting of the Amount of the Permanent Award for Disability.
- In accordance with Sections 72 and 76 of the Act, the amount of disability pension benefits payable under legislation prior to January 1, 1980 will be deducted from earnings loss benefits paid to the worker.
- In keeping with the practice initiated by Board Order 1/85, where a worker’s disability pension is commuted, the amount deducted from earnings loss benefits will be the value of the disability pension at the time of commutation.
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