Ottawa still mopping up benefits boondoggle 18 months later

'Misunderstandings' and bureaucratic bungling left almost 90,000 low-income seniors - most of them women - without their guaranteed income supplement (GIS) cheques for up to seven years. Eighteen months after discovering the gaffe, the federal government is still mopping up as more compensation cheques are being issued this month.

Another round of compensation cheques issued this month for thousands of low-income seniors

A bureaucratic blunder in Ottawa left some 90,000 low-income seniors without their monthly guaranteed income supplement (GIS) cheques, some for as long as seven years. Eighteen months after discovering the problem, federal officials are still trying to mop up. (Holly Caruk/CBC)

Thousands of low-income seniors are getting special compensation payments this month after federal bungling denied them their guaranteed income supplement (GIS) cheques for up to seven years.

Ottawa has already delivered retroactive GIS payments to 89,840 seniors, by the end of last month, at an average of $1,970 each — though several hundred got cheques for more than $20,000. The retroactive payments have totalled $271 million to date.

Jean-Yves Duclos, Minister of Families, Children and Social Development, reversed his department's policy in May and said low-income seniors must be given cost-of-living increases on their long-denied GIS payments. (Sean Kilpatrick/Canadian Press)

In a precedent-setting move, the government reversed its position and agreed to additional cost-of-living payments to account for the impact of inflation on the GIS money that was owed. Those extra payments have hit almost $11 million so far.

And this month, some 13,500 low-income seniors are getting another cheque for an average of $135 each to partially compensate them for the loss of means-tested government benefits and credits that resulted from the sudden spike in their income because of the retroactive GIS payments in 2015 and 2016.

That compensation — so far about $1.8 million — is based on the Canada Revenue Agency's annual June calculation of benefits and credits that the agency administers.

Altogether, mopping up the GIS boondoggle has meant a $284-million hit to the federal books. That figure does not include any compensation for the loss of provincial benefits and credits that many of these low-income seniors have forfeited because of the sudden influx of cash.

Labour intensive

It also excludes the Canada Revenue Agency's bill for the labour-intensive exercise of reviewing more than 100,000 files.

"It's just a nightmare," said Ottawa social-policy consultant Richard Shillington, referring to the complexity of fully compensating these financially fragile seniors. "Some things you can't undo."

There are currently about 1.8 million recipients of GIS, a poverty-fighting program intended for low-income retirees. Eligibility for monthly payments is largely determined automatically through income data supplied by the Canada Revenue Agency, but some files have had to be handled manually.

In April 2015, while installing a new computer system to help end those manual reviews, officials discovered thousands of seniors whose potential GIS eligibility had never been reviewed.

It's not a systems problem, it's an attitude problem.- Richard Shillington, social policy consultant

Fixing that oversight has taken 18 months so far, and required a special minister's order on May 5 this year to pay interest on the GIS money owed – something the government had been refusing to do until Prime Minister Justin Trudeau was pressed on the matter in the House of Commons in March, saying he was "looking into the issue."

A government spokesperson says it's up to the provinces and territories to compensate seniors for any means-tested benefits they might have lost, such as enrolment in drug plans or home-care eligibility.

"Officials have worked closely with provincial and territorial partners on potential impacts related to seniors' entitlements to other benefits, and all have indicated a willingness to not have clients negatively impacted by the lump-sum GIS payments," Amelie Caron said in an email.

Misunderstandings cited

"Should seniors want to know more about benefits provided by provincial ministries, they should contact their provincial government directly."

The missing GIS payments, mainly affecting seniors in Ontario and the western provinces, were partly the result of "misunderstandings by officials in various…processing centres," CBC News reported earlier this year, based on an internal document obtained through the Access to Information Act.

Shillington exposed a similar GIS gaffe in 2001, when several hundred thousand low-income seniors were discovered to be forfeiting millions in retroactive payments. After a public outcry, the Liberal government searched out the eligible recipients and provided some back payments, but without interest or other compensation.

While he welcomes recent efforts to more fully compensate seniors denied their GIS payments for years, Shillington says the next social-program challenge is to fix retroactivity rules for the Canada Pension Plan.

Ottawa social-policy consultant Richard Shillington says he welcomes the federal government's efforts to correct its guaranteed income supplement (GIS) gaffe, but says officials must also fix unfair rules for retroactive payments for the Canada Pension Plan. (shillington.ca)

Thousands of older Canadians eligible for monthly CPP pension cheques do not apply for the benefit, and some only become aware of their eligibility as late as their 80s and 90s. But unlike the recent GIS episode, Service Canada provides retroactive CPP payments only for a maximum of 11 months — even though the money belongs to pensioners who, alongside their employers, paid premiums throughout their working lives.

"It's not a systems problem, it's an attitude problem," says Shillington of Tristat Resources.

The GIS program pays about $10 billion each year to low-income seniors, 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 $864, depending on circumstances.

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About the Author

Dean Beeby

Senior reporter, Parliamentary Bureau

Dean Beeby is a CBC journalist, author and specialist in freedom-of-information laws. Follow him on Twitter: @DeanBeeby

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