Notice to National Life Long-Term Disability Insurance Recipients

 

On October 29, 1999, officials of the Treasury Board of Canada Secretariat (TBS) and the Public Service Alliance of Canada (PSAC) reached an agreement on retroactive pay equity adjustments for employees and former employees in the CR, DACON, EU, HS, LS and ST groups. The Pay Equity Agreement may affect your benefits under the Long Term Disability Insurance (LTD) plan.

HOW DOES THE PAY EQUITY AGREEMENT AFFECT LTD BENEFITS?

LTD benefits are calculated based on your insured annual salary on the day before your LTD payments started (i.e.: salary on the last day of your elimination period). If your insured salary increases because of pay equity, your LTD benefits will be adjusted to include the new amount. Your last employing Department has the responsibility to issue your Pay Equity adjustment, and to advise National Life of any change to your insured salary. If you have any questions about your eligibility for an adjustment, please contact your Department directly. If you do not know the telephone number, please call the pay equity hotline at 1-888-346-8886. They will provide you with the telephone number of your last Department.

WILL INCREASES TO OTHER INCOME BE OFFSET FROM MY LTD BENEFITS?

LTD benefits are reduced by income from certain other sources, such as pension income under the Public Service Superannuation Act (PSSA) and excess earnings under an LTD Rehabilitation Program.

If you are receiving a PSSA pension which increases as a result of pay equity adjustments, the Superannuation Directorate of Public Works and Government Services Canada will advise National Life of the new amount. Similarly, if you were participating in an LTD Rehabilitation Program, your Department will advise the Insurer of your increased earnings.

National Life will calculate the increased LTD benefit payable to you as a result of the pay equity adjustment, and deduct increased Rehabilitation Program earnings, increased pension income, or any other offsets. The difference remaining after this reconciliation will be paid to you in a lump sum.

Should your LTD benefits be overpaid, National Life will request recovery for the period starting July 29, 1998, the date the pay equity adjustments were rolled into ongoing wages.

WHEN WILL MY LTD BENEFITS BE ADJUSTED?

National Life cannot adjust your disability benefits until they receive the necessary information from your Department, and the Superannuation Directorate if you are a PSSA pensioner. It is expected that this information will be provided to the Insurer starting early in 2001. Please be assured that you will be contacted directly once National Life has received the required information and has adjusted your benefits. If you are entitled to a lump sum LTD payment, you will receive a letter explaining the adjustment shortly after National Life releases your cheque.

HOW WILL MY INCOME TAX BE AFFECTED

Retroactive LTD payments are normally taxed in the year the funds are received from National Life. However, the 1999 Federal Budget announced a legislative change whereby retroactive LTD lump-sum payments may be taxed in the year to which the payment relates, rather than the year received. This change will apply to payments made after 1994 and only if the retroactive payment is $3000 or more. Similar provisions apply to Quebec residents for payments made after 1993, where the retroactive amount is $300 or more.

The Canada Customs and Revenue Agency (CCRA), or the Ministère du Revenu du Québec (MRQ) will recalculate any previous years income tax returns related to your retroactive LTD lump sum payment, but only upon your request. CCRA and MRQ will apply the calculation that is most advantageous to you. National Life will automatically provide you with a yearly breakdown of any eligible LTD payment by completing the appropriate taxation form(s). That information will be provided along with the letter explaining your adjustment.

FINAL CONSIDERATIONS

Up to date information is needed to ensure that LTD cheques are paid to the correct recipient and sent to the correct mailing address. If your name or address has changed since National Life last paid benefits to you, please contact the Insurer at the address below.