Some 83,000 low-income seniors who were denied their guaranteed income supplement (GIS) for up to seven years will not get any interest on the missing retirement money, even though government bureaucrats are responsible for the problem.
The government is sending out at least $245 million worth of GIS cheques by the end of next month, with a few individuals getting between $20,000 and $40,000 in back payments. Some people are owed money retroactive to 2008, with the average repayment about $6,000.
An internal document obtained by CBC News under the Access to Information Act shows the late payments, affecting seniors largely in Ontario and the western provinces, were partly the result of "misunderstandings by officials in various … processing centres."
But the department says there will be no compensation for failing to deliver years' worth of cheques.
"Interest is not paid on retroactive benefit payments," Julia Sullivan, spokeswoman for Families, Children and Social Development, said in an email.
The legislation that governs GIS payments, known as the Old Age Security (OAS) Act, gives the minister discretion about whether to take "remedial action" to compensate anyone improperly denied benefits because of an "administrative error."
Review process updated
Eligibility for GIS is largely determined automatically through income data supplied by the Canada Revenue Agency, affecting some 1.6 million recipients, but about 100,000 files must be reviewed manually to determine eligibility.
The back payment problem was discovered in late April last year as a new computer system was being installed to end the manual review process. Officials learned that 140,000 people had never been reviewed, some cases dating back to 2008.
The department found that 43,000 of those were in fact not eligible for GIS, but 83,000 had indeed been denied their benefits. Officials are still reviewing the cases of another 12,000 people, which means the $245 million in total backdated benefits is likely to rise.
'Reaction by clients has been positive.' –Internal memo to clerk of Privy Council
The liability was a late inclusion in the 2014-15 Public Accounts of Canada, though not reported as a separate line item.
The problem was considered serious enough that the clerk of the Privy Council, Canada's top federal public servant, was briefed extensively about the problem during the election campaign last August.
"Phone calls are being made, in addition to letters, for those seniors receiving more than $10,000," a memo to then clerk Janice Charette said. "Reaction by clients has been positive."
Provinces were notified about the problem last August, since receipt of a GIS cheque often triggers other provincially paid benefits, such as prescription drug programs, long-term care eligibility and at least four other types of benefits. In addition, a large cheque suddenly delivered to a low-income senior can put at risk eligibility for some benefits.
"We continue to work in collaboration with [the provinces] to assess and mitigate potential impacts on affected seniors," Sullivan said.
2nd payment gaffe
Mathieu Filion, spokesman for new Liberal minister Jean-Yves Duclos, said the minister has "insisted" that the department complete the review and reimbursement process by the end of March this year.
The payment gaffe is the second by the department in the last year. Officials identified another "system anomaly" last February that had been withholding employment insurance money from about 800 needy families in each year since 2007.
The money was supposed to be paid as a family supplement to top up EI claimants whose household income, including spousal income, was no higher than $25,921.
In the EI case, low-income families were shortchanged about $35 a week, with a total cost to restore the missing money to the affected families at $1.7 million. No interest was paid on those missing amounts either.
The GIS program pays about $10.1 billion each year to low-income retirees, most of whom are women. The non-taxable monthly cheques, paid to those also receiving Old Age Security, are indexed to inflation. The monthly amount can be as high as $773.60, depending on circumstances.