Inflation has been in the news and on many minds this year. To protect the value of your pension from inflation, your pension payments may increase annually thanks to cost of living adjustments (COLA). Once you receive an adjustment, it becomes part of your lifetime pension going forward.
The Board approved a 1.98% COLA based on the 2021 change in the Consumer Price Index (CPI) of 4.80%. The COLA will be included in the July 2022 pension payments to eligible pension recipients. This increase also applies to eligible members with a deferred account.
Each year the plan’s actuary and the Board study the financial position of the Superannuation Adjustment Account (the Account) to determine if another COLA can be granted on July 1, and if so, its value. COLA is based on changes in the Canadian CPI averaged over the 12-month period from January to December of the previous year.
If the actuary determines that the Account cannot fund a COLA equal to 2/3 of the prior year’s change in the CPI, the Board may approve a smaller COLA for that year. It is also possible that the actuary may recommend that no new COLA be granted in a particular year. The Account funding level is affected by factors that include changes in the CPI, investment returns, funding formula, and plan demographics. A history of CSSB COLA percentages since 1977 can be found here.
The Board and the actuary are concerned that, unless changes are made, the Account will not be able to meet the target of granting additional COLA’s each year at the rate of 2/3 of the increase in the Consumer Price Index.
The Superannuation and Insurance Liaison Committee, which represents plan members in negotiating plan benefits, is studying the sustainability of the COLA Account.