Inflation Protection
Inflation is the tendency of items to increase in price as time passes. Pension plans can help offset the negative impact of inflation by providing inflation protection, also known as indexation.
Inflation protection - periodic increases to the amount of a pension payment - reduces the erosion of the buying power of your pension that inflation causes.
In the CAAT Plan, when members retire, their initial pension payment is called the "lifetime pension". Inflation protection, when it is granted, is added to the lifetime pension each year that the CPI has increased, and the new amount is the new lifetime pension. In other words, Indexation is cumulative. Once inflation protection has been paid, it is a permanent addition to your retirement income.
The CAAT Plan inflation protection rate for 2012 is 2.14%. This is the amount by which your CAAT Plan pension will increase as of January 1, 2012.
Inflation protection for 2012 will be calculated for all lifetime pensions, including survivor benefits in payment. The increase will be applied to your entire pension and your bridge benefit if you are receiving one.
Once an inflation protection increase is applied to your lifetime pension, it becomes a permanent part of your lifetime pension.
Annual notification
Each year in December, pensioners are sent a letter detailing the increase to their pensions (if any) for the upcoming year. The letter will show the amount of the inflation protection increase, the gross pension payments after any inflation protection increases have been applied, any adjustment for income tax, and the net payment as of January 1 in the following year.