Inflation protection increases will be paid through 2014

With the changes, the Plan is in a position to grant inflation protection increases through 2014 on all service, including the previously-committed increases on the portion of pensions based on pre-1992 service.

After 2014, inflation protection on pre-1992 service will return to being granted on an ad hoc basis, when the Plan has sufficient surplus. This is consistent with the terms of the Plan in effect when this service was earned, and has not  changed. What has changed is the financial position of the Plan. Past Plan surpluses allowed ad hoc inflation protection to be funded through 2014. Financial projections now s how that the Plan will not be in a position to make ad hoc increases on the portion of pensions based on pre-1992 service beyond 2014.

Periods of service after 1992 differ in terms of when inflation protection increases are applied.

1992-2007 service

Service between 1992 and 2007 has guaranteed inflation protection because it is pre-funded through specific contributions made during those years. When this benefit was introduced, contributions were increased to reflect the increased cost of providing inflation protection.

Post-2007 service

Inflation protection for service after 2007 is not guaranteed. It depends on the Plan’s funding status which is reviewed with each valuation, at least every three years.

Further increases for pre-1992 service would be Plan enhancements. They are not possible until the Plan has suf ficient surplus

The Funding Task Force considered a request from some pensioners that additional inflation protection be provided for ser vice earned before 1992.

Under the Plan’s Funding Policy, inflation protection that is not guaranteed can only be paid when the Plan has sufficient surplus. The Plan’s governors cannot, under the policy, grant further ad hoc increases to pensions at this time.

“When the Plan is in a financial position to do so it will look at granting more ad hoc inflation protection increases on pre-1992 service,” says Derek Dobson, Chief Executive Officer and Plan Manager

Active members are making additional contributions to help stabilize the Plan’s financial health during investment market volatility. Beginning in 2012 they will also be paying more contributions to help fund the extra pension payments needed because members are living longer.

"The Plan’s governors understand the importance of inflation protection to pensioners. When the Plan is in a financial position to do so it will look at granting more ad hoc inflation protection increases on pre-1992 service," says Derek Dobson, Chief Executive Officer and Plan Manager.