Inflation Protection / COLA
One of the many benefits of having a PSPP pension is that when you retire you’ll have guaranteed income for the rest of your life. Your defined benefit pension is protected against inflation to help you maintain your purchasing power throughout retirement through a cost of living adjustment (COLA). This helps provide you with the peace of mind knowing that your lifetime pension is protected against any potential cost-of-living increases.
What is (COLA)?
COLA is a value-added benefit of your PSPP pension. We recognize that the cost of living will continue to increase, so we adjust pensions in pay by a percentage that is based on the consumer price index (CPI) to ensure that your income keeps pace with rising prices.
Your pension can be increased by the amount of the CPI, up to a maximum of 8% per year. If the CPI exceeds 8% in a year, the excess will be carried over to the next year when the CPI is less than 8%. If you are a survivor, you will also receive a COLA letter from us.
Note: the 2018 COLA increase was 1.6%. If you started your pension before 2017, you will receive the full 1.6% increase to your pension. If you started your pension in 2017, the increase to your pension will be pro-rated for the number of months you received your PSPP pension in 2017.
How do you calculate my COLA?
COLA is calculated using a three-step process:
1. We look at the consumer price index (CPI) over a 24-month period ending September 30 of the current year, which is then divided into two 12-month periods.
2. For each 12-month period (beginning October 1 and ending September 30), we calculate the average of these measures.
3. Then we divide the average of the second 12-month period (beginning October 1 and ending September 30) by the average of the first 12-month period (beginning October 1 and ending September 30) to get the COLA for the coming year.
When will my pension be increased?
You will receive your annual COLA increase in January of each year. This will be reported on your Retired Member Statement (RMS) that we’ll send to you in January.
If you’re receiving a survivor pension, you will still continue to receive a letter outlining your COLA adjustment every January.
If I retire before I turn 65, will my pension still be protected from inflation?
Yes. The PSPP protects your pension from inflation regardless of the age you retire. Each year after you retire, COLA may be added to your PSPP pension.
For more information about the early retirement bridge benefit, review what you need to know about CPP integration. While the early retirement bridge benefit and any inflation indexation it received is no longer included in your PSPP pension when you reach age 65, your PSPP lifetime pension will continue to be indexed for inflation.
If you have any questions about your COLA and the impact to your pension, please contact us at 416-364-5035 or toll-free in Canada and the U.S. at 1-800-668-6203.
If you wish to know what the cost of living-adjustment will be as soon as it is available, please register for e-alerts.