Don’t spend that pension yet – you may owe money

It may be no coincidence that this is back in the news just about tax-filing time

To my knowledge, I have never been a recipient of government financial over-indulgence, either intended or as a result of that other guilty party – the infamous computer glitch. At least, I certainly hope this is the case.

Apparently, however, some $66 million in Canada Pension Plan debt, owed to Ottawa, has gone uncollected because of a technical bug dating back to 2009 – a bug which has now been fixed, allowing the federal government to resume chasing down thousands of Canadians who owe the Canada Pension Plan (CPP) the $66 million, due to erroneous over-payments.

How do we know about this?

I see two ways – (one) if you are among the 15,000 people who were perhaps overpaid – and still owe the government CPP money, you may have received a notice in the mail from Employment and Social Development Canada (ESDC) over the last two years about the debt, but there’s been no active collection — until now. ESDC estimates that 95 per cent of the individuals owe less than $25,000 each, and most owe less than $5,000.

Or (two) you are reading here or elsewhere, about what CBC news obtained in a memo and other information about the dormant debt problem through the Access to Information Act and published last year on March 12.

ESDC reinstated the collection of these old debts last November, going after the 15,000 individuals or their estates — after almost a decade of inaction.

It appears now that the collection of these “debts on inactive accounts receivable” were stopped due to systems-related issues (computer glitch) following the implementation of a new IT platform in 2009, which prevented an accurate determination of amounts owing,” says an Oct. 4 memo for Families, Children and Social Development Minister, Jean-Yves Duclos.

ESDC has now resolved these issues, nearly 10 years later, and has reinstated the collection of debts. A parallel technical glitch has also prevented the collection of Old Age Security (OAS) over-payments on inactive accounts, something which the department is still working to resolve.

This is not petty cash – the ESDC currently claws back CPP and OAS over-payments for individuals who are still receiving their monthly benefits. In 2016, for example, the department recovered about $134 million of the $233 million in outstanding over-payments.

It may be no coincidence that this is back in the news columns just about tax-filing time.

What happened anyway?

It seems some of these people improperly received CPP disability benefits or children’s benefits under the program – and some estates continued to cash cheques even after the intended recipients had died.

But, after 2009, the CRA was unable to collect anything — and could no longer accurately calculate the amounts owed – apparently because the department had migrated its CPP system to a new IT platform.

After 10 years I have absolutely no idea how many pensioners or their estates will welcome this news but the Department says it has an “undue hardship” policy to deal with people in financial difficulty and can arrange to spread out payments over a longer term.

CBC reports the newly resumed collections, which are being phased in, will ensure ‘equity with other Canadians’ who paid back government benefits they weren’t supposed to get, says the memo.

A spokesperson for the department, Josh Bueckert, said the first wave of fresh collection notices has reached 1,730 people since last November, and 266 of those notices have already resulted in repayments worth just over half a million dollars. But, that’s a long way from $66-million.

It all seems to me to be a great burden to be imposed on a number of pensioners as a result of a side impact of the implementation of the Phoenix payroll system – something of a giant fiasco – which started in 2016, and which continues to this day, to leave thousands of public servants overpaid, underpaid or not paid at all.

To make matters worse, CBC News recently reported on internal government documents indicating it may take a decade to achieve “overall stability” for the Phoenix system.

Government efficiency, fairness and once again, transparency seems to be slower and slower to evolve to solve real problems for government employees, taxpayers and pensioners alike.

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