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Pensions - Canada Pension Plan - General

. Weatherley v. Canada (Attorney General)

In Weatherley v. Canada (Attorney General) (Fed CA, 2021) the Federal Court of Appeal (Stratas JA) reviews the nature of the Canada Pension Plan:

(1) The nature of the Plan

[8] The Plan is a far-reaching, national, compulsory income insurance scheme. It is a "“contributory plan”", not "“a social welfare scheme”": Granovsky v. Canada (Minister of Employment and Immigration), 2000 SCC 28, [2000] 1 S.C.R. 703 at para. 9; Miceli-Riggins v. Canada (Attorney General), 2013 FCA 158, [2014] F.C.R. 709 at paras. 68-69.

[9] With some minor exceptions, Canadian employees and employers are required to make contributions into the Plan. Individuals who experience an event that is likely to affect their income, such as retirement, disability, the death of a wage-earning spouse or the death of both parents, and who satisfy technical qualification criteria are entitled to payments from the Plan. See Miceli-Riggins at paras. 67-74.

[10] Although far-reaching, the Plan was never intended to be comprehensive or "“meet the needs of all contributors in every conceivable circumstance”": Miceli-Riggins at paras. 69 and 73; Runchey at paras. 122-125. Instead, it "“provide[s] partial earnings replacement in certain circumstances”": Runchey at para. 122. It was intended to work alongside and compliment other financial planning instruments such as private savings, private pensions, and private insurance policies by providing a partial replacement of earnings: Granovsky at para. 9; Expert Report on CPP Policy & Legislation, at pp. 4-6 (Respondent’s Record at pp. 3645-3647); Miceli-Riggins at paras. 69-70; Runchey at para. 122. It is not anything like a guaranteed annual income. It is more like modest help for recipients to meet their basic needs.

[11] Benefits under the Plan are part of an interconnected network. Each achieves "“various objectives, sometimes conflicting or overlapping objectives”": Runchey at para. 124. Each has a "“forest of detailed eligibility and qualification rules”": Runchey at para. 124. Each has been introduced into the Plan in a way that interacts with the broader scheme of the Canada Pension Plan and the aim that the Plan remain sustainable and affordable for all contributors and beneficiaries: Expert Report on CPP Policy & Legislation, at p. 4 (Respondent’s Record at p. 3645). Thus, the Plan has been described as a "“complex web of interwoven provisions”" where "“[a]ltering one filament”" can "“disrupt related filaments in unexpected ways, with considerable damage to legitimate governmental interests”": Miceli-Riggins at para. 64.

[12] Like many insurance schemes, the Plan is cross-subsidized: all contributors subsidize all benefits. Benefits are paid from direct contributions of employees, employers, and monies earned from the investment of contributory funds not required to pay current benefits: Miceli-Riggins at para. 72; Runchey at paras. 40-42. Differences in benefits can correlate to the size of contributions. But no individual contributor has a right to benefits commensurate with the level of their contributions. Instead, differences in benefits usually happen as a result of "“an intricate scheme with many eligibility and qualification rules”": Runchey at para. 125. Put another way, just like insurance, "“contributions do not always translate into benefits”": Miceli-Riggins at para. 72; Runchey at para. 124. So some who have paid plenty into the Plan might never receive a cent while others who have paid little might get much more.

[13] Also like many insurance schemes, the Plan is self-sustaining. It has no recourse to general government funding such as the consolidated revenue fund. If payments are increased for survivorship benefits, either contributions must increase or payments out must decrease. Giving to some takes from others.

[14] All of this means that the government must continually monitor the Plan’s financial health. It conducts actuarial calculations based on scores of demographic and economic factors to try to predict future contributions and benefits: Expert Report on CPP Policy & Legislation, at pp. 41-42 and 47 (Respondent’s Record at pp. 3682-3683 and 3688). If the calculations show the Plan’s financial health is in jeopardy, the cure is not easy. The Canada Pension Plan can be amended but only by joint agreement of Parliament and a majority of provincial governments: s. 114; Expert Report on CPP Policy & Legislation, at p. 7 (Respondent’s Record at p. 3648). If joint agreement is not reached and contributions become insufficient to sustain the Plan, ss. 113.1(11.05) of the Act kicks in and automatically increases the amount that all contributors, rich or poor, young or old, must pay: see also Expert Report on CPP Policy & Legislation, at p. 47 (Respondent’s Record at 3688). For example, in the mid-1990’s, a higher-than-expected amount of disability payments meant that contributions were increased and the eligibility and calculation of disability benefits were tightened: Expert Report on CPP Policy & Legislation, at pp. 45-46 (Respondent’s Record at pp. 3686-3687).

. Landau v. Canada (Attorney General)

In Landau v. Canada (Attorney General) (Fed CA, 2021) the Federal Court of Appeal characterizes the purpose of the CPP regime:

[14] The applicant’s challenge overlooks the nature and role of the Plan. The nature and role of the Plan rebuts allegations that it creates salient distinctions under section 15(1) or that any distinctions are discriminatory under section 15(1) or unjustified under section 1 of the Charter. This scheme was designed to provide partial earnings replacement in certain circumstances and was never meant to be comprehensive or meet the needs of all contributors in every conceivable circumstance: Weatherley v. Canada (Attorney General), 2021 FCA 158 at para. 10. It is much like an insurance scheme full of cross-subsidization where some come out ahead and some do not. This sort of scheme also requires that clear and rigid criteria be drawn and specified for contributions and benefits. As well, as explained in Weatherley, an increase in benefits or reduction of contributions for some often must result in the reduction of benefits or increase in contributions or both for others; and many of these others are needy and vulnerable and also arguably fall under section 15(1) of the Charter. On these points, see also Granovsky v. Canada (Minister of Employment and Immigration), 2000 SCC 28, [2000] 1 S.C.R. 703 at para. 9; Weatherley at paras. 8-14; Miceli-Riggins v. Canada (Attorney General), 2013 FCA 158, [2014] F.C.R. 709 at paras. 68-69; Runchey v. Canada (Attorney General), 2013 FCA 16, [2014] 3 F.C.R. 227 at para. 109. On benefits plans similar to the Plan and the difficulty in attacking bona fide distinctions under those plans, see similar comments in various Supreme Court cases such as Law v. Canada, 1999 CanLII 675 (SCC), [1999] 1 S.C.R. 497, 170 D.L.R. (4th) 1 at para. 105, Gosselin v. Quebec (Attorney General), 2002 SCC 84, [2002] 4 S.C.R. 429 at para. 55, Withler v. Canada (Attorney General), 2011 SCC 12, [2011] 1 S.C.R. 396 and Auton (Guardian ad litem of) v. British Columbia (A.G.), 2004 SCC 78, [2004] 3 S.C.R. 657.

[15] Auton, in particular, recognizes the necessity of line-drawing and certainty in benefits schemes such as this so that the schemes can achieve their purposes. It suggests (at para. 42) that section 15(1) claims like this are possible only where the legislative scheme targets groups for illegitimate reasons extraneous to the scheme. This is not the case here.

[16] The recent Supreme Court case of Fraser v. Canada (Attorney General), 2020 SCC 28, 450 D.L.R. (4th) 1, analyzed and discussed in Weatherley, above, does not overrule or cast doubt on any of the above cases.

[17] This application is on all fours with Weatherley, which binds us. We note that the applicant in this case did not take issue, directly or indirectly, with Weatherley, its exposition and analysis of the relevant principles under section 15(1), its treatment of Fraser, or the result it reached.

[18] In Weatherley, this Court held that the denial of a benefit, a second survivor’s pension under the Plan, to a person whose second spouse is deceased did not infringe section 15(1) of the Charter. For many of the same reasons expressed in Weatherley, the denial by the Plan of a survivor’s pension or its financial equivalent to a person who has never had an eligible spouse or cohabitee does not infringe section 15(1) of the Charter.

[19] In oral argument, the applicant attempted to distinguish Weatherley on its factual record and her reliance on direct discrimination in this case. We are not persuaded that the factual record in this case is sufficiently different to distinguish Weatherley. In fact, this case is rather close to Weatherley. Both concern the denial of benefits concerning survivorship to particular groups and both have statistical and background evidence concerning the denial—in a number of respects the same or substantially similar evidence. As for the alleged distinction between direct and indirect discrimination, Fraser (at para. 76) suggests that the relevant analysis under section 15(1), set out in Weatherley and other section 15(1) cases, is the same whether the discrimination is direct or indirect.