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Pension Indexing

Pension indexing

Pensioner FAQ -
Indexation

The cost of living rises as time passes. Indexation, also known as a cost of living adjustment, is designed to help Pensioners deal with increasing costs.

The CAAT Plan is partially indexed. Your pension may see an increase each January 1. The Consumer Price Index (CPI), a widely accepted measure of inflation published by Statistics Canada, is used for the calculation.

The calculation is based on the percentage change in the CPI from one year to the next. September was chosen as the measuring point - so, for example, the January 1, 2009 indexation rate is based on the percentage change in the CPI from September 2007 to September 2008. See the box on this page for the detailed calculation.

The years in which you earned your Pensionable Service are the main factor in calculating the size of any indexation increase for which you may qualify. There are 3 time periods in which Pensionable Service is treated in different ways.

Your pension earned up to December 31, 1991, has indexation funded until December 31, 2014. Continuation after that date will depend on whether the Plan can afford it and would require an amendment to the Plan text. It is one of a number of options in the Plan's Funding Policy.

Your pension earned between January 1, 1992 and December 31, 2007 has indexation funded indefinitely.

Your pension earned from January 1, 2008 onwards will have indexation funded if the Plan can afford it. This will be determined annually.

Pensioners receive a letter near the end of each year advising them of the indexation rate and the amount of any adjustment to their pension for the following January. Pensions must have been paid in the previous year in order for there to be any increase.

Pensions that began less than 12 months before the January 1 increase date will receive a prorated increase. In subsequent years, a full increase will apply.

Indexing applies to all pensions in payment, to Deferred Pensions, and to any Bridge Benefit you receive. The Bridge Benefit ends, along with any indexation it has earned, once you reach age 65. It will be removed from your pension payment at that time.

Indexation Calculation

The CPI in September 2008 was 115.7. In September 2007, it was 111.9. This represents a change of 3.4% over the one-year period.

You can do this calculation by dividing the difference in the numbers (3.8) by the September 2007 amount (111.9). This produces an amount of 0.033958, or 3.4%.

Multiply this amount by 75%. (The CAAT Plan pays 75% of the percentage change in the CPI.)

The result is 2.55%. This is the indexation amount paid by the Plan in 2009.

January 2009