January 1 to December 31, 2024
In accordance with the NJC Terms of Reference, the undersigned submit this annual report regarding the performance and the administration of the Disability Insurance Plan during the period of January 1 to December 31, 2024.
Chairperson of the Board of Management
Patti Bordeleau
Employer Side Members
- Michel Alarie, Indigenous Services Canada
- Irene Arkorful, Treasury Board of Canada Secretariat
- Sharon Bowles, Treasury Board of Canada Secretariat
- Dr. Bryan Garber, Department of National Defence
Bargaining Agent Side Members
- Demi Braniff, Professional Institute of the Public Service of Canada
- James Infantino, Public Service Alliance of Canada
- Stéphanie Rochon Perras, Association of Canadian Financial Officers
- June Winger, Union of National Defence Employees
GENERAL STATEMENT
The Disability Insurance Plan Board of Management (the “Board”) is pleased to provide this report on the administration of the Public Service Disability Insurance Plan (the “DI Plan” or “the Plan”), its financial performance and the activities of the Board for the period of January 1 to December 31, 2024.
PLAN OVERVIEW
The DI Plan provides income replacement for Plan members during periods of long-term disability equal to 70% of insured earnings. Employees who meet the criteria of total disability preventing performance of the duties of their regular employment become eligible for long-term disability insurance benefits at the expiration of the longer of paid sick leave or the 13-week elimination period for the DI Plan. Employees receive income replacement payments as well as disability case management and rehabilitation services from Sun Life Financial (the Insurer). These payments are offset by payments to which employees may be eligible from other disability benefit programs.
The DI Plan is a group insurance policy underwritten and administered by Sun Life Assurance Company of Canada.
FINANCIAL AND ADMINISTRATIVE OVERSIGHT
The total benefits paid out by the Plan during the 2024 year amounted to $496.3 million, compared to $455.0 million in 2023. As of the end of 2024, the DI Plan had 13,165 members utilizing benefits (claims in payment at year-end 2024) and had $3.904 billion in claims reserves. The average number of Plan members during 2024 was 312,000 (up from 305,000 members in 2023).
The disability incidence rate in 2024 was higher than the previous year at 11.3 approved claims per thousand Plan members, compared to 10.5 approved claims per thousand Plan members in 2023. The rate of termination of active claims (approved claims in payment) decreased from 2.40 terminated claims per 10 claims in payment in 2023 to 2.37 terminated claims in 2024.
The overall result of the 2024 financial experience for the Plan at year-end was positive, with an in-year gain of $26.7 million. As of December 31, 2024, the balances in the Claims Fluctuation Reserve and the Surplus Account were $194.3 million and $511.2 million respectively for a total Plan surplus of $705.5 million. This is an increase over the $678.8 million total Plan surplus as of December 31, 2023. The Plan is on a sound financial footing at the end of 2024. The Board, in its role of overseeing the financial management of the Plan, will continue as always to monitor the trends in plan experience in the coming year.
In addition to overseeing the financial results of the Plan, the Board continued to work actively with the Insurer and the Plan Sponsor (Treasury Board Secretariat) to strengthen and improve the effectiveness of the administration of the Plan. Some of the key activities in this area are outlined below.
MEMBER EXPERIENCE
At its May meeting, the Board was briefed by the Insurer on the results of the annual Claimant Survey conducted in 2023. The results are based on the research methodology which provides a true account of the entire claims experience. Objectives included assessing claimants’ satisfaction with their disability claim experience and identifying areas of improvement.
The survey results were compared to those of the previous year, as well as other benchmark groups, representing results from other large clients of the Insurer. The DI Plan Disability Client Index score is an overall measure of the disability claim experience that considers factors such as the ability to make the claim process easy, the ability to proactively reach out during the claim process and the ability to effectively handle any issues during the claim process. DI Claimants’ overall satisfaction with their disability claim experience was slightly below the results of other large Sun Life clients, particularity in areas such as the return-to-work experience. Issues mentioned related to payment timeliness, case management conduct, and claim decisions. Opportunities for improvement include making the claim process easier, educating the claimant on the next steps of the claim process and which supporting documents are required, and improving payment timeliness.
ACTIVITIES
The Board began 2024 with 33 appeals ready to be reviewed, and successfully reviewed 25 appeals (compared to 21 in 2023). However, with case volume continuing to remain high, the Board continues to have several outstanding appeals to be heard and has had numerous discussions on how to resolve the backlog of appeals. Ongoing improvements to file presentation remain a collaborative effort between the Board and the Insurer. The NJC Secretariat began adding bookmarks to the files to help the Board members and the Medical Consultant review them more efficiently.
The sub-committee, formed to review the elements of the Board’s Terms of Reference and DI Plan provisions, successfully fulfilled its mandate during this period. The Board tabled their updated Terms of Reference which was approved by the Executive Committee. The sub-committee completed their work on the proposed changes to the provisions of the DI Plan and the Board presented these to the Executive Committee. These were deemed to be helpful and will be provided to Group Insurance Policy and Programs, Treasury Board Secretariat (TBS) for consideration at the appropriate time.
At its annual Sun Life Headquarters’ meeting, the Board received various presentations, including Sun Life’s Retroactive Claims Adjustment Project, legislative updates to the Quebec Pension Plan, Sun Life’s Digital File Feed, claims adjudication and management, the limitation period and disability appeals statistics. The Board also received a presentation on the 2023 DI Plan Financial Results. Highlights of years 2020 to 2024 are presented in the chart below.
It was reported that the overall financial experience of the Plan in 2024 was positive, with an in-year gain of $26.7 million. Of that amount, the interest on the Plan surplus total at the beginning of the year contributed $23.1 million in revenue. The net in-year plan experience (without the surplus) was therefore a gain of $3.6 million. Therefore, the premium level alone, without the interest of $23.1 million generated from the surplus was sufficient to support the costs incurred by the claims in 2024. This is similar to 2023 and 2022; however, is in contrast with the year 2021 where the premium level, without the interest from the surplus, was not sufficient to support the costs incurred by the claims that year.
Summary of Annual Financial Results
| Year |
Premium Income ($ Million) |
Interest Income ($ Million) |
Paid ($ Million) |
Total Plan Expenditures* ($ Million) |
In-year Gain/Loss ($ Million) |
|---|---|---|---|---|---|
| 2020 | 838.6** | 91.4 | 391.3 | 522.0 | 408.0 |
| 2021 | 597.9 | 94.9 | 380.8 | 680.9 | 11.9 |
| 2022 | 651.0 | 99.1 | 421.8 | 653.8 | 96.3 |
| 2023 | 708.5 | 131.4 | 455.0 | 754.4 | 85.5 |
| 2024 | 777.3 | 146.4 | 496.3 | 897.0 | 26.7 |
* Total plan expenditures are calculated as paid claims, expenses and premium taxes, as well as the change in the claims reserves held at the beginning of the year as compared to the end of the year. (Note: The paid claims amount column is included in the total Plan expenditures column. The In-year Gain/Loss equals the Premium and Interest Income minus the Total Plan Expenditures.)
** The 2020 Premium Income is composed of “Regular premiums” totalling $524.8M and two lump sum deposits totalling $313.7M.
The Board has reviewed the monthly and annual reports received from the Insurer and it has found that the current format continues to serve its needs and purposes.
CLAIMS EXPERIENCE
The 2024 annual report prepared by the Insurer includes a broad overview of Plan claims data. During the 2024 calendar year, there were 5,088 notified claims, an increase of 461 or 10.0%; 3,533 claims were approved, an increase of 320 or 10.0% from the 2023 calendar year. The number of claims declined during the year increased by 106 or 9.0% and the number of claims terminated (closed) during the year decreased by 5 or 0.2%. The decline and approval rates are something that the Board will continue to monitor with the Plan Insurer.
Claims Statistics
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| Number of claims notified during the year | 3,421 | 3,906 | 4,365 | 4,627 | 5,088 |
| Number of claims approved during the year | 2,575 | 2,816 | 3,189 | 3,213 | 3,533 |
| Number of declined claims during the year | 1,046 | 830 | 1,331 | 1,178 | 1,284 |
| Number of terminated (closed) claims during the year | 2,900 | 2,759 | 2,897 | 3,058 | 3,053 |
| Total number of approved claims at year-end | 12,149 | 12,188 | 12,512 | 12,694 | 13,165 |
| Total number of pending claims at year-end | 311 | 498 | 451 | 647 | 811 |
Distribution (%) of Claims Approved in 2024 by Causes of Disability
Total for Year 2024
| Cause of Disability | Per Cent |
|---|---|
| Accidents | 5.2 |
| Arthritis-Rheumatism | 3.9 |
| Cardiovascular | 1.9 |
| Gastro | 1.7 |
| Mental Health Conditions | 59.0 |
| Neoplastics (Cancer) | 11.1 |
| Neurological | 5.9 |
| Spine/Sacro-Iliac | 5.2 |
| Other | 6.1 |
Mental health conditions remain the leading cause of new disability claims approved in 2024. This continues to be the experience across other Canadian disability plans. The distribution of causes of disability for all new claims approved in 2024 is shown in the chart above. As noted, the most frequent cause of new approved claims was mental health conditions (59.0% of the total), a decrease from 2023 (59.6%). The actual number of newly approved claims for this cause of disability increased from 1,916 in 2023 to 2,084 in 2024. The increase is slightly below the overall increase in approved claims in 2024 which explains the decrease in percentage in proportion to all other types. Similarly, several other causes have seen their numbers increase in 2024 which is in line with the overall volume of claims which increased in 2024 by 10%.
The second largest cause of new disability claims was neoplastics (cancer), increasing from 10.9% of all approved claims in 2023 to 11.1% of all approved claims in 2024. Many other categories also increased as compared to the previous year.
APPEAL CASES
The Board’s terms of reference include the duty to examine appeals against claims declined by the Insurer, making recommendations to the Insurer on these and in certain circumstances providing advice to the Employer on practices related to disability management in departments and agencies.
As noted previously, the Board reviewed a total of 25 appeal cases in 2024. The Board found no reason to disagree with the Insurer’s decision to deny benefits in 20 appeals, disagreed with the Insurer’s decision in four (4) appeals, and one (1) appeal was settled ahead of the Board meeting.
The Board requested that Sun Life provide statistics for 2024 on the number of claims that were denied, subsequently appealed, and ultimately referred to the Board. Sun Life reported that 1,284 claims were denied; of these, 307 were referred to its Appeals Team, and 194 were not overturned on appeal. Of the 194, 21 were referred to the Board. For comparison, 44 appeals were referred to the Board in 2023. While the number of appeals referred in 2024 is lower, it is important to note that the Board reviews appeals from multiple years, not exclusively those submitted within the current reporting period.
TRAINING
Board members were offered to attend three (3) conferences in 2024: the Canadian Legal and Legislative Update Conference, the Canadian Public Sector Pension and Benefits Conference and the 57th Annual Canadian Benefits Conference. The Board looks forward to continuing to participate in conferences and learning sessions held by the International Foundation of Employee Benefit Plans (IFEBP) as a means to develop Board member expertise and to stay current with trends.
Board Membership
The Board met ten (10) times during the period covered by this report, devoting much of its time to hearing appeal cases and overseeing the administration and financial experience of the DI Plan. These meetings consisted of eight (8) half-day sessions and two (2) full-day sessions, equivalent to ten (10) half-day meetings in total.
At the time of production of this report, the members of the Board are:
- Patti Bordeleau, Chairperson;
- Sharon Bowles, Treasury Board Secretariat;
- Michel Alarie, Indigenous Services Canada;
- Irene Arkorful, Treasury Board Secretariat;
- Bryan Garber, Department of National Defence;
- James Infantino, Public Service Alliance of Canada;
- Stéphanie Rochon Perras, Association of Canadian Financial Officers;
- Demi Braniff, Professional Institute of the Public Service of Canada; and
- June Winger, Union of National Defence Employees
The Board would like to thank Nathalie Leblanc, Agriculture and Agri-Food Canada, for her contributions during her term, which concluded prior to the production of this report.
There were two (2) Employer Side observers from the TBS Observer Program that completed the program in 2024. It is expected that the Program will continue in the years to come with new observers.
Conclusion
The Board would like to thank Dr. Raymond Aubin for providing expert medical advice during the review of appeals in their role as Medical Consultant to the Board.
The Board would also like to express its appreciation to the Insurer for its commitment and collaboration in working with the Board. A number of constructive initiatives were undertaken over the year in the interest of supporting and communicating with Plan members and providing the Board with the knowledge and information it needed to fulfil its duties.