Ottawa short-changed more than 270,000 veterans on pensions, disability payments

More than 270,000 ex-soldiers were short-changed by Veterans Affairs Canada for over eight years because of an accounting error worth at least $165 million, CBC News has learned.

The mistake was uncovered by the veterans ombudsman’s office, which has worked with the federal department for over a year to get it to confirm the mistake and make amends, federal sources said Monday.

The error was made in the monthly indexing calculation on disability awards and pensions and is believed to have started as far back as 2002.

The department didn’t factor in the basic provincial tax credit for individuals. That led to lower monthly payments for 272,000 veterans — a significant number of them Second World War and Korean war veterans.

As many as 175,000 of them have since died, leaving the federal government with a legal mess to untangle related to their estates.

The error ran unchecked from 2002 to 2010, according to internal department numbers analyzed by the ombudsman’s staff.

In 2011, Veterans Affairs inexplicably resumed using the correct calculation, the sources said.

The department did not, however, make any move to reimburse veterans for the lost income, which would have — in the worst cases — amounted to a few hundred dollars per month.

Some veterans did up receiving reimbursement — but inadvertently, and without knowing it. The Liberal government’s 2016 budget poured more money into disability awards, and the measure included retroactive payments.

But the ombudsman said the difference was not made up for those who received disability pensions between 2002 and 2010.

Veterans Affairs acknowledged the mistake, but has not said anything publicly.

A submission apparently went before the federal Treasury Board to offer retroactive payments to those still left out, according to two federal government sources.

Whether it was approved, and what sort payments might be involved, remain unclear.