Volume 5 Issue S1, 2019, pp. 111-119

Introduction: This article examines the history of Veteran financial benefits provided by Veterans Affairs Canada (VAC) since the First World War. Methods: The history of financial benefits is described using policy documents held at VAC. Data from the Life After Service Studies (LASS), covering Veterans released since 1998, were used to describe income and employment among Veterans today. Results: For wartime-era Veterans, benefits supported those with service-related disability and their employment, along with those experiencing poverty. Post–Korean War Veteran benefits were limited to service-related disability benefits. Studies during 1997–2003 suggested that the needs of Veterans and their families were inadequately addressed by existing VAC programs. Consequently, the Government of Canada announced plans to modernize its programs, and the New Veterans Charter (NVC) was launched in 2006. Subsequently, NVC financial benefits have been expanded numerous times. The incomes of Regular Force Veterans declined after release but recovered, surpassing pre-release income, and low-income rates were half that of Canadians. Most Regular Force Veterans were employed after release and satisfied with their work. Lower rates of difficult adjustment were found among employed Veterans, who were satisfied with their finances and jobs. Higher rates of difficult adjustment were found among Veterans who were not employed; who were not satisfied with their job, main activity, or finances; or who were experiencing low income. Discussion: Wartime-era Veterans’ financial benefits and employment supports were guided by the idea of opportunity with security. After 2006, policy returned to a focus on employment supports to enhance Veteran well-being while continuing to provide financial benefits for Veterans experiencing service-related disability.

Introduction : Cet article se penche sur l’historique des avantages financiers fournis aux vétérans par Anciens Combattants Canada (ACC) depuis la Première Guerre mondiale. Méthodes : L’historique des avantages financiers est décrit à l’aide de documents stratégiques détenus par ACC. Les données découlant des Études sur la vie après le service (EVAS), qui englobent les vétérans libérés depuis 1998, ont été utilisées pour décrire le revenu et l’emploi des vétérans à l’heure actuelle. Résultats : Pour ce qui est des vétérans du temps de la guerre, les avantages appuyaient ceux qui étaient aux prises avec une invalidité liée au service et leur emploi, ainsi que les vétérans vivant dans la pauvreté. Les avantages offerts aux vétérans de l’après-guerre de Corée étaient limités aux avantages pour invalidité liée au service. Les études menées entre 1997 et 2003 laissaient entendre que les besoins des vétérans et de leur famille n’étaient pas convenablement pris en considération par les programmes existants d’ACC. Par conséquent, le gouvernement du Canada a annoncé des plans visant à moderniser ses programmes, et la Nouvelle Charte des anciens combattants (NCAC) a été lancée en 2006. Les avantages financiers de la NCAC ont par la suite été élargis de nombreuses fois. Le revenu des vétérans de la Force régulière a décliné après la libération, mais s’est rétabli de sorte à surpasser le revenu d’avant la libération, et le taux de faible revenu correspondait à la moitié de ceux enregistrés pour la population canadienne. La plupart des vétérans de la Force régulière occupaient un emploi après leur libération et en étaient satisfaits. Les vétérans employés qui étaient satisfaits de leur situation financière et de leur emploi avaient des taux plus faibles d’adaptation difficile à la vie civile, alors que l’on constatait des taux plus élevés chez les vétérans sans emploi; insatisfaits de leur emploi de leur activité principale ou de leur situation financière; et ceux touchant un faible revenu. Discussion : Les avantages financiers et les mesures de soutien à l’emploi offerts aux vétérans du temps de la guerre étaient guidés par l’idée de « possibilités et sécurité ». Après 2006, la politique a de nouveau été orientée vers les mesures de soutien à l’emploi pour accroître le bien-être des vétérans tout en continuant d’offrir des avantages financiers aux vétérans souffrant d’une invalidité liée au service.

Veterans Affairs Canada’s (VAC) newly developed Departmental Results Framework establishes three core responsibilities for the department, with the first titled Benefits, Services, and Support – supporting the care and well-being of Veterans and their dependents or survivors through a range of benefits, services, research, partnerships, and advocacy. The Departmental Results Framework is based on a conceptual framework of Veteran well-being for research and policy development.1,2 Under this conceptual framework, Veteran well-being is multidimensional, involving seven domains: health, purpose (including employment), finances, social integration, life skills, housing and physical environment, and culture and social environment.

Since the domains are interconnected, improving well-being does not necessarily happen by making progress in the domains independently. For example, employment that offers little job security can impact negatively on outcomes in the domains of health (i.e., anxiety) or housing (i.e., can’t afford suitable housing); conversely, obtaining employment can impact positively on finances. Additionally, each Veteran will experience the domains of well-being in different ways over their life-course, being influenced by many factors across the well-being domains. To support the well-being of Veterans and their families, strategies are required across all the domains and involve multiple players who all have roles to play: the Veteran and their family on the one hand, and communities and public and private sectors on the other.

In this article, we review the history of military and Veteran income and employment policies since the First World War, identifying key dates up until the end of 2018. Additionally, income and employment indicators of Veterans captured in the 2003 Canadian Community Health Survey and the Life After Service Studies of 2010 and 2013 are described.

History of military and Veteran income and employment policies

VAC has a long history of providing income support benefits, including financial, vocational, and educational benefits, to Canadian Veterans of the First and Second World Wars and the Korean War, as well as to their families (see Table 1). Among the first legislation related to this support was the Pension Act in 1919,3 which outlined the terms and conditions for Veteran disability and death benefits. The principles behind the establishment of the disability pension can be found in the report of the Committee to Survey the Organization and Work of the Canadian Pension Commission,4 which cites the three basic principles of pension law upon which the disability pension was based: (1) as a mark of gratitude, (2) in payment of debt, and (3) to provide subsistence. This suggests that the disability pension provided compensation on the basis of actual physical/mental loss, as well as the loss of earning capacity.

To administer monthly lifelong disability pensions, a basic pension rate was established, based on how the disability affected the ability of the pensioner to perform in the general unskilled labour market. Amounts for each class of disability were selected according to the military rank of the pensioner (after 1968, one rate applied to all Veterans regardless of their military rank). The amount of the disability pension awarded was based on the extent of disability, from 0% to 100%. This was determined by criteria in the “Table of Disabilities”17 and the degree to which the disability was related to service. Additional benefits were provided for spouses and dependents, and benefits continued to surviving family members. Though many additions and revisions have been made to Veteran benefits over the decades, elements of the Pension Act are used to this day to adjudicate disability benefits.

Soon after the Pension Act’s introduction, however, it was recognized that the act did not provide for all Veterans whose postwar incomes were affected by their service. In 1930, the War Veterans Allowance Act introduced a War Veterans Allowance (WVA) to help low-income Veterans meet their basic needs.18 The WVA provided monthly income support – which was similar yet more generous than provincial welfare programs. Like with the Pension Act, additional benefits were provided for spouses and dependents, and benefits continued to surviving family members. Over the years, eligibility was expanded, and the WVA was harmonized with the federal government’s Guaranteed Income Supplement (GIS). By the mid-1980s, approximately 90,000 Veterans were participating in the allowance program, which had an annual expenditure of about $454 million.19

Table

Table 1. Key dates for Veteran financial and employment benefits

Table 1. Key dates for Veteran financial and employment benefits

Year Action
1919 The Pension Act3 introduces a monthly disability pension and death benefits for Veterans, as well as allowances such as the Attendance and Clothing Allowance.
1930 Bill C-195 introduces the War Veterans Allowance to provide income support for Veterans who are deemed unemployable as a result of service.
1944 The Department of Veterans Affairs Act6 is established to deliver programs and coordinate activities on behalf of Veterans.
1946 The Veterans Charter offers a wide range of programs and benefits, including vocational training; Veterans Land Act loans for farming (full- or part-time), fishing, or building a home; loans to start up businesses; and enhanced disability pension benefits and priority hiring in the federal civil service.
1971 Pension Act amendments allow Canadian Armed Force members injured in a special duty area to receive a disability pension while still serving (prior to this, disability pensions were payable only on release).
1990s Canadian Armed Forces personnel and their families voice concerns about compensation. The Standing Committee on National Defence and Veterans Affairs undertakes a “Quality of Life” review and in 1998 tables a report, “Moving Forward: A Strategic Plan for Quality of Life Improvements in the Canadian Forces.”7
1999 Veterans Affairs Canada and the Department of National Defence accept the Standing Committee’s recommendations, resulting in pay increases for members and amendments to the Pension Act that allow any eligible serving member to receive a disability pension while serving (Bill C-41).8
2000 The Veterans Affairs Canada – Canadian Armed Forces (VAC-CAF) Advisory Council is established to provide advice on how to address current challenges for members and Veterans.
2004 The VAC-CAF Advisory Council tables its report, “Honouring Canada’s Commitment: ‘Opportunity with Security’ for Canadian Forces Veterans and Their Families in the 21st Century,” calling for a modernized approach to services and benefits.9
2006 Bill C-4510 introduces a suite of programs referred to as the New Veterans Charter (NVC), designed to promote wellness including a Rehabilitation Program and related financial supports such as the Earnings Loss Benefit, Supplementary Retirement Benefit, Permanent Impairment Allowance, and Canadian Forces Income Support benefit, and replaces the monthly disability pension with a lump sum disability award. A Job Placement Program and financial advice were also introduced.
2011 Bill C-5511 introduces the Permanent Impairment Allowance Supplement and allows the disability award to be received as a lump sum payment, as yearly payments, or as a combination of yearly payments and a lump sum payment; Career Transition Services replaces the Job Placement Program. The minimum Earnings Loss Benefit is increased from senior private to basic corporal for Regular Force Veterans and for certain Reserve Force Veterans.
2012 Disability pension benefits payable under the Pension Act are no longer deducted from the Earnings Loss Benefit and Canadian Forces Income Support benefit.
2015 Bill C-5912 introduces the Retirement Income Security Benefit, the Critical Injury Benefit, and the Family Caregiver Relief Benefit for Veterans. All Veterans of the Reserve Force become eligible for the same minimum Earnings Loss Benefit as Regular Force Veterans. Bill C-2713 introduces priority appointment for medically released Veterans under the Public Service Employment Act.
2016 Bill C-1514 increases the amount of the Earnings Loss Benefit and the disability award and renames the Permanent Impairment Allowance as the Career Impact Allowance, implementing policy changes to measure factors related to employability and career advancement.
2017 Bill C-4415 creates an Education and Training Benefit, enhances Career Transition Services, and ends the Family Caregiver Relief Benefit, replacing it with a Caregiver Recognition Benefit.
2018 The government announces in the federal budget16 that it will introduce a Pension for Life to replace the lump sum disability award, with pain and suffering compensation available monthly for life or as a lump sum payment along with an additional amount for those with a severe and permanent impairment, as well as an Income Replacement Benefit that will combine several financial benefits into one.

Following the Second World War, Canada was faced with re-integrating more than 1 million service members back into civilian life. In 1941, Privy Council Order 7633 promised a rehabilitation benefit to everyone who served in the Armed Forces during the war.9 The comprehensive program of benefits for Veterans, available in 1946, became known as the Veterans Charter, offering rehabilitation and vocational training with the purpose of providing Veterans with opportunities for jobs and security.9 The charter also introduced loans for farming, fishing, or building a home; loans to start up businesses; university education; enhanced disability pension benefits; and priority hiring in the federal civil service.

In the late 1990s, the Standing Committee on National Defence and Veterans Affairs held hearings on the quality of life in the military. One of the main concerns expressed by Canadian Armed Forces (CAF) members and their families was compensation and benefits, particularly the perception that their salaries were lower than those of employees of the Canadian public service.7 It was determined that military compensation and benefits must adequately reflect the skills and experience of serving members, as well as the unique nature of military service – namely, the loss of personal freedom, frequent postings that cause disruption to personnel and their families, periods of prolonged separation from families, and overtime (i.e., the military factor). The gap between military and comparable public service incomes was closed in 1999, and pay increases were implemented to reflect the military factor.20 These changes, in turn, affected Veteran benefits tied to post-release income.

In July 2000, the VAC Canadian Forces Advisory Council was established to examine and offer advice related to the challenges facing CAF members, Veterans, and their families. In October 2002, the council concluded that the time had come to propose comprehensive reform. In its March 2004 report, “Honouring Canada’s Commitment: ‘Opportunity with Security’ for Canadian Forces Veterans and Their Families in the 21st Century,” the council outlined the principles, processes, and key issues for an updated Veterans Charter.9 In response, the Government of Canada announced, in May 2004, plans to modernize its programs and services.

That same year, VAC conducted an internal analysis identifying four key issues: (1) too few CAF Veterans with a disability pension were successfully transitioning from military to civilian life; (2) the fragmented response at the time, involving multiple service providers with no single focus for post-release case management, was resulting in gaps and overlaps between programs; (3) the disability pension was the sole gateway for CAF Veterans to enter VAC programs and services, unintentionally encouraging dependence and “unwellness” at significant human and financial cost; and (4) VAC’s disability pension program did not align with the principles of modern disability management.

After 2 years of extensive analysis, design, and consultations, the Canadian Forces Members and Veterans Re-establishment and Compensation Act (CFMVRCA),21 which became known as the New Veterans Charter (NVC), was launched in April 2006. The act featured rehabilitation, career transition services, financial supports, access to health care, and case management tailored to meet the needs of transitioning contemporary CAF Veterans, as well as establishing a lump sum cash award to compensate for permanent disability. The focus was shifted from chronic health maintenance to the promotion of ability, well-being, and independence.22 The goal was to provide CAF Veterans and their families with practical help to begin their new lives outside the military.

Like the original Veterans Charter, the New Veterans Charter provides rehabilitation for all eligible Veterans. The CFMVRCA offers a modernized, comprehensive, and integrated range of programs and services, reflective of a modern approach to disability. VAC’s programs align well with the three building blocks of disability – (1) supports, (2) employment, and (3) income – which are outlined in the “IN UNISON: A Canadian Approach to Disability Issues” vision paper.23 Examples include providing improved access to disability supports by enhancing their portability and helping offset their costs (e.g., medical and psychosocial rehabilitation and health coverage for those who are currently ineligible to receive it); enhancing the employability of persons experiencing disability by encouraging their re-entry into the labour market and helping promote work opportunities (e.g., vocational assistance and career transition services); and providing an income safety net that supports individual work efforts while also providing financial assistance if self-support is impossible or insufficient to meet basic needs (e.g., income replacement benefits).

The NVC has modernized compensation for disability using a dual award approach that compensates for earnings losses (economic losses) and pain and suffering (non-economic losses) separately. Since its inception, much of the focus has been on the NVC’s financial compensation rather than its intention of encouraging rehabilitation, if needed, and purposeful engagement and well-being in civilian life. For example, several studies have compared financial compensation provided under the Pension Act to that provided under the NVC, essentially ignoring the benefits of rehabilitation provided by the latter.246

VAC clients have also expressed dissatisfaction with pain and suffering compensation. In a 2010 national survey,27 25% of VAC clients who were receiving VAC disability benefits (i.e., monthly disability pension, lump sum disability award, and associated allowances) did not believe these benefits recognized their service-related disability. This was somewhat lower for war service Veterans than CAF Veterans. Dissatisfaction increased somewhat by 2017: in a 2017 national survey,28 31% of VAC clients did not feel adequately compensated for the effects of their service-related disability, and 23% did not feel recognized for their service-related disability. This situation did not apply to war service Veterans, who were fairly satisfied with the benefits; as well, Veterans with a monthly disability pension tended to be less critical of disability benefits than Veterans who received a lump sum disability award.

As a result, since the implementation of the NVC, financial compensation has been expanded several times over the past decade.

Income and employment among Veterans today

An estimated 660,000 Veterans live in Canada today, including 58,000 who served during the Second World War and the Korean War, and almost 600,000 post–Korean War Veterans.29 The 2003 Canadian Community Health Survey (CCHS) included a series of questions to identify Veterans living in Canada. A study based on Veterans in the 2003 CCHS30 found that the vast majority (94% of those aged under 70 years) of post–Korean War Veterans were of working age and that 70% had worked in the week prior to the survey – the same rate as other Canadians. Low income rates, adjusted for family size, were found to be half those of other Canadians. However, rates of disability were higher, and life satisfaction rates lower, among Veterans compared with other Canadians.

While it is currently unknown how the entire Veteran population is doing in terms of income and employment, the 2013 Life After Service Studies (LASS) captured more than 70,000 Veterans of the CAF Regular Force and Reserves who had released since 1998. The LASS are led by VAC, in partnership with the Department of National Defence and Statistics Canada.31 To date, there have been three cycles of LASS (2010, 2013, and 2016). This program of research includes an income tax record linkage study and a survey. A mortality study was included in 2010, and in 2013, CAF Reserve Force Veterans were added in addition to Regular Force Veterans. The 2016 LASS added a longitudinal component to the survey. The LASS give an unprecedented picture of the socio-economic and military characteristics of this important segment of the Veteran population and measure well-being across multiple domains.31

In terms of finances, the 2013 LASS income tax linkage study found that the incomes of CAF Regular Force Veterans initially declined after release, but eventually recovered (by the eighth year, post-release income surpassed pre-release income), with labour market earnings accounting for more than half of income post-release.32 Low income rates (measured using household income and adjusted for family size) were half those of the general Canadian population, and the majority (70%) of Veterans were satisfied with their finances. However, some sub-groups of the Veteran population experienced more issues in the area of finances. The decline in income in the first 3 years post-release for females and medically released Veterans was 10 times the 2% average.32 Most Veterans and their families who experienced low income were not VAC clients.32 Veterans who had served for a shorter period of time, those who had released involuntarily, and Veteran families with more children had higher odds of experiencing persistent low income.33 While the Veteran’s income accounted for, on average, 69% of the family income in the pre-release year, this proportion declined to 65% in the year after release, suggesting greater reliance on the incomes of other family members after release.

Employment is important to finances, not only for the income it provides but also for the benefits, such as pensions, as well as for the security provided by remaining attached to the labour market. A recent study of CAF Veterans found satisfaction with employment and satisfaction with finances to be highly correlated.34 Similar to the domain of finances, the employment picture for CAF Veterans looks, on the surface, to be quite positive. Most CAF Regular Force Veterans released since 1998 were employed after release and satisfied with their work – both employment and satisfaction rates grew over time, and the unemployment rate did not differ from that of other Canadians.35 However, Veterans were less likely than other Canadians to participate in the labour market, and they were more likely to experience activity limitations at work. Additionally, variations in outcomes were found across certain groups of the Veteran population. For example, unemployed Veterans were younger at release, had the fewest years of service, and were more likely to have served in the army than in the navy or air force. Veterans who were not in the labour force were older, had more years of service, and experienced the most barriers to work.36 Employment rates were also lower among female and medically released Veterans.35

Finances and employment are both related to adjustment to civilian life. In the 2010 LASS survey, about one-quarter of CAF Regular Force Veterans reported a moderately or very difficult adjustment to civilian life. In terms of finances and employment, a significantly lower prevalence of difficult adjustment was found among Veterans who were employed, satisfied with their finances, and satisfied with their job or main activity. A significantly higher prevalence of difficult adjustment was found among Veterans who were unemployed, were not in the labour force or were unable to work, were not satisfied with their job or main activity, were experiencing low income, and were not satisfied with their finances.32

About one-third of the LASS population were clients of VAC (i.e., receiving VAC benefits, mainly disability benefits). VAC clients experienced greater declines in income post-release than non-clients (11% decline in the first 3 years post-release compared with 4%, respectively), however, clients were older and more likely to be retiring, as indicated by their lower earnings and higher pension income.37 The finances of Veterans who have service-related injuries or conditions are particularly interesting. As of March 2017, about 10% of VAC clients were participating in or had completed the Rehabilitation Program.29 An analysis of the LASS 2013 income tax data found that Veterans who had completed the program had recovered less than half (40%) of their pre-release labour market earnings.38 Rates of low income were similar before and after program completion and higher while participating in the program. Several studies suggest that the Rehabilitation Program may not be reaching all CAF Veterans who have conditions that cause them difficulty re-establishing a civilian life.36,39,40

Among the first legislation related to the long history of financial support to Veterans was the Pension Act in 1919, which provided monthly disability benefits. However, soon after its introduction, it was recognized that the Pension Act did not provide for all Veterans whose postwar incomes were affected by their service. As a result, the War Veterans Allowance, aimed at Veterans experiencing low income, was introduced during the Great Depression. The original Veterans Charter of 1946 recognized the need for supports beyond those related to disability. However, Veterans who served after the Korean War were not eligible for the WVA, nor for the re-establishment benefits provided under the original Veterans Charter. In 2006, the New Veterans Charter again recognized low income as a barrier to re-integration to civilian life and included supports for low-income Veterans under the Canadian Forces Income Support benefit. Support was limited, however, to those who had completed the Rehabilitation Program. Even for VAC clients, the minimum Earnings Loss Benefit (which does not account for household income or size) and the Canadian Forces Income Support have been found to be out of step with how low income is measured in Canada.41 The introduction of the Income Replacement Benefit (IRB), expected in April 2019, will provide a yearly minimum amount of $48,600, which is comparable to the middle-class tax bracket of $45,916 in 2017. (IRB will not be adjusted based on household income or size.) That said, Veterans are also eligible for the same income support benefits, such as social assistance and the GIS, as other Canadians, which were not generally available when the War Veterans Allowance was introduced.

In the area of finances, it is important to note that to support the well-being of Veterans and their families, strategies are required across all domains, particularly in employment. In the original Veterans Charter, employment was seen as key to the financial security of Veterans. The government offered rehabilitation to all Second World War Veterans, with the philosophy of providing Veterans opportunities for jobs and security, and the assumption that the great majority of Veterans would rather work than receive benefits from the government.42 However, since the implementation of the NVC, the focus has been on the adequacy of compensation that it provides, perhaps due to a lack of understanding that the NVC was based on the same philosophy as the original Veterans Charter. As a result, financial benefits have been expanded several times since 2006, representing a reversal of focus from employment to financial security, and then to a reliance on government transfers as the key to financial security.

Improving the finances of Veterans will likely require the involvement of multiple players. A systematic literature review found that even people with severe mental health conditions can, and do, return to work after a prolonged absence.40 Restored health and work are not necessarily sequential; in fact, work leads to recovery and well-being. One of the most promising interventions aiding return to work was supported employment,40 specifically Individual Placement and Support, which integrates four systems beyond government needed to remove barriers to work: (1) health care, (2) compensation, (3) employer, and (4) personal systems.43

Accounting for approximately 10% of the Veteran population, LASS provided much-needed information on recent CAF Veterans; however, more recent data are needed on the broader CAF Veteran population. According to 2003 data,30 post–Korean War Veterans were better off in terms of finances and were similar in terms of employment rates compared with other Canadians. This population also had high rates of disability but may not have experienced difficulties remaining employed. However, these post–Korean War Veterans are ageing, which may increase the rate of disability and play a role in labour market engagement and, consequentially, its financial picture. To address this limited knowledge of the broader population, VAC has worked with partners to identify Veterans on surveys such as the Canadian Longitudinal Study on Ageing and the Canadian Survey on Disability to form the basis of future research.

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None declared.

All authors conceived, designed, researched, and drafted the manuscript and approved the final version submitted for publication.

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None declared.

This article has been peer reviewed by the Guest Editors.