be $70.58 (2.3% x $3,068.75) as opposed to $93.58 (2.3% x $4,068.75) if the
indexing was calculated on her Gross Monthly Benefit. As a result, if Ms. Belec
didn’t have any employment income in January and February of 2007 then she
would receive a Monthly Benefit of $4,139.33 ($4,068.75 + $70.58) if the
indexing was calculated on her Net Monthly Benefit. If the indexing was
calculated on her Gross Monthly Benefit, then she would have received an
increased Monthly Benefit of $4,162.33.
Where employment or occupational income is deducted as “other income”, the
intention of the policy would be to apply the indexing increase to her gross
benefit on January 1 of each year before deducting the employment income that
would be anticipated for January.
In Ms. Belec’s situation, where she ultimately received both CPP and PSSA benefits, which
each have their own indexing increases, the intention of the Policy terms with regard to indexing
is unclear. Is the indexing to be calculated on the gross benefit (70% of salary indexed) or on her
net benefit after deducting the unindexed amount of CPP and PSSA? This is the issue to be decided.
The Policy does not specify a different methodology to implement the indexing provisions
where the offset has its own indexing factor such as for CPP and PSSA. The Policy only provides
for one method to apply the indexing increase, for both situations where CPP and the PSSA
benefits which have their own indexing increases, and for the situation where occupational income
may be being received where there is no indexing.
The CHESS, the computer program used by Sun Life to apply the indexing and to calculate
the Monthly Benefit used the same interpretation of the Policy as sought the Plaintiff, namely it
calculated the annual indexing increase firstly based on her Gross Monthly Benefit and then
deducted the “other income”. Sun Life’s CHESS program also deducted the COLA increases to
both the CPP and the PSSA benefits, which is against the specific terms of the Policy.
Sun Life argues that even if the CHESS calculations applied the annual indexing to her
Gross Monthly Benefit rather than her Net Monthly Benefit, and wrongfully deducted the COLA
increases to her CPP and PSSA benefits, it came to the right answer anyway. The CHESS
methodology arrives at the same indexed Monthly Benefit as if the indexing increase was applied
to her Net Monthly Benefit, which it now argues is the correct interpretation of the Policy. This
situation of mathematical equivalence occurs where the offsets are for CPP and PSSA, which have
the same rate of indexing. The methodology proposed by Sun Life does not produce equivalent