Your monthly pension payment may increase as a result of an annual cost-of-living adjustment (COLA) each July 1.
COLA is calculated as a percentage of the increase in the Canadian Consumer Price Index (CPI). The increase in the CPI is calculated as the average CPI for the 12 months ending April 30 of the preceding school year over the average CPI for the 12 months prior to that period.
What is the Consumer Price Index (CPI)?
It is an indicator of changes in consumer prices experienced by Canadians. It is obtained by comparing, over time, the cost of a fixed basket of goods and services purchased by consumers. It is published monthly by Statistics Canada. Changes in the CPI are the most common measure of inflation.
For more information on the CPI, please visit the Statistics Canada website at www.statcan.gc.ca
The TPP has 2 types of COLA and the type that applies to your pension depends mainly on the date you retired from the TPP. These COLA types are detailed below.
Variable COLA (If you retired on or after August 1, 2006 or retired before August 1, 2006 and elected this COLA type)
This type is based on the Plan’s funded status at year end December 31 of the previous year.
2021 COLA notification:
As at December 31, 2020, the Plan’s investment fund achieved a positive return on investments of 6.78% (net of investment management fees) and Plan assets were $5.519 billion. The Plan’s funded ratio was 79.0%.
While the Plan’s investment performance was positive in 2020, the Plan’s funded status remains less than 90%. Therefore, retirees and beneficiaries eligible for a Variable COLA will not receive an increase in their pension in 2021.
CPI minus 1% COLA (If you retired before August 1, 2006)
This type allows for COLA to be granted when the increase in the CPI is greater than 1%.
2021 COLA notification:
The increase in the CPI for 2021 was 0.88% (not greater than 1%). As a result, effective July 1, 2021, a COLA cannot be granted to your monthly pension for the next 12-month period.
CPI minus 1% COLA calculation:
The average CPI for 12 months ending April 2021 = 137.8
The average CPI for 12 months ending April 2020 = 136.6
• 137.8 - 136.6 = 1.2
• 1.2 / 136.6 = 0.88% (the increase in the CPI)
• As 0.88% is less than 1%, COLA will be 0% from July 1, 2021 to June 30, 2022.
CPI minus 1% COLA history:
2021 = 0.0%
2020 = 0.9%
2019 = 1.1%
2018 = 0.6%
2017 = 0.6%
2016 = 0.3%