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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 Disability Insurance (DI) plan.
HOW DOES THE PAY
EQUITY AGREEMENT AFFECT DI BENEFITS?
DI benefits are calculated based on your insured annual salary
on the day before your DI payments started (i.e.: salary on the
last day of your elimination period). If your insured salary
increases because of pay equity, your DI 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 Sun 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?
DI benefits are reduced by income from certain other sources,
such as pension income under the Public Service Superannuation
Act (PSSA), and excess earnings under a DI 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 Sun
Life of the new amount. Similarly, if you were participating in a
DI Rehabilitation Program, your Department will advise the
Insurer of your increased earnings.
Sun Life will calculate the increased DI 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 DI benefits be overpaid, Sun 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 DI
BENEFITS BE ADJUSTED?
Sun 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 Sun Life has received the required
information and has adjusted your benefits. If you are entitled
to a lump sum DI payment, you will receive a letter explaining
the adjustment shortly after Sun Life releases your cheque.
HOW WILL MY INCOME
TAX BE AFFECTED
Retroactive DI payments are normally taxed in the year the
funds are received from Sun Life. However, the 1999 Federal
Budget announced a legislative change whereby retroactive DI
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 Québec
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 DI lump sum payment, but only upon your request. CCRA
and MRQ will apply the calculation that is most advantageous to
you. Sun Life will automatically provide you with a yearly
breakdown of any eligible DI 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 DI cheques are
paid to the correct recipient and sent to the correct mailing
address. If your name or address has changed since Sun Life last
paid benefits to you, please contact the Insurer at the address
below.
Sun Life of Canada
Federal Government Disability Insurance Plan
Group Disability Claims Department
P.O. Box 12500
Station CV
Montreal, QC
H3C 5T6
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