N.W.T. and Nunavut workers' compensation commission proposing new pension system

The way benefits are calculated in the Northwest Territories and Nunavut for people who are permanently injured on the job may be changing.

The Northwest Territories and Nunavut Workers' Safety and Compensation Commission (WSCC) is calling for public input into a proposal to do away with lifetime pensions and replace them with a lump sum payment plus a pension to age 65 for lost earnings.

The WSCC's president and CEO said the North is the only jurisdiction in Canada that has a pension based solely on income at the time of injury multiplied by the degree of permanent impairment the worker is left with as a result of their injury or workplace disease.

"What it says is the percentage of impairment that you have is equal to the amount of loss of earnings," said Debbie Molloy. "It's a very blunt sort of a system. The newer system gets a little bit more nuanced than that."

Compensation commissions across North America use the American Medical Association Guide to the Evaluation of Permanent Impairment to determine the percentage of impairment a person suffers as a result of different types of permanent injuries.

Under the new system, the same guide would be used to come up with a lump sum payment aimed at compensating injured workers for non-financial losses associated with their permanent injuries.

A second component of compensation would be aimed at addressing lost income. That would be a monthly pension aimed at making up for earnings workers lose as a result of their permanent injury. It would amount to 90 per cent of the difference between net average earnings before and after the permanent injury.

The WSCC proposes that 50 per cent of any Canada Pension Plan disability benefits the worker receives be deducted from the montly pension.

Not a cost saving measure, says president and CEO

"It's not in any way a cost-saving measure for us," said Molloy of the proposed change. "It is really about ensuring that we are staying true to what the system was meant to do, which is to provide income replacement for workers that are injured on the job."

The commission hired a company to do an analysis of how much the proposed system would cost compared to the current system. The firm that did it concluded that "the proposed structure does not represent a significant departure from the existing system in terms of cost assuming that claims services would be able to achieve similar claim outcomes as other jurisdictions in Canada."

It is really about ensuring that we are staying true to what the system was meant to do.- Debbie Molloy, N.W.T. and Nunavut WSCC president and CEO

A discussion paper on the WSCC's website offers an example to illustrate the inequity of the current system. Two workers, a heavy duty mechanic and a teacher, suffer the same permanent injury. The teacher returns to work and resumes earning income as well as collecting a lifetime pension for their injury. The heavy duty mechanic cannot return to work because of their injury, loses their ability to earn a living, and receives only the lifetime pension.

Under the proposed new system, the teacher would receive only a lump sum payment aimed at compensating them for their personal injury. They would not receive a pension. The heavy duty mechanic would also get a lump sum payment, but in addition, there would be monthly payments to compensate for loss of earnings.

The WSCC is proposing that the monthly payments continue until age 65 instead of for life. The new plan would also include a retirement benefit.

Molloy estimates that any move to the new system is still years away. Implementing it would require changes to legislation in both Nunavut and the N.W.T.

She says the commission has asked large employers and workers' organizations for input. It has an online survey on its website where the public can offer feedback on the proposed change.