Inflation protection for your OPTrust pension
Starting January 2016, your OPTrust pension will increase by 1.3%. The annual increase applies to all OPTrust pensioners, survivor pensions and to the deferred pensions of former and divested OPTrust members.
Every January, OPTrust pensions are adjusted for the increase in the cost of living, as measured by the Consumer Price Index (CPI), reported by Statistics Canada. The result is protection for the buying power of your pension – and security for the future.
The CPI used by OPTrust reflects the cost of a weighted basket of over 600 goods and services that are typically purchased by Canadian consumers every month. These weights ensure that a 10% price increase in rent, for example, would have a greater impact on the index than a 10% increase in the price of milk.
How your annual adjustment is calculated
OPTrust’s annual pension adjustment is calculated based on the change in the average monthly CPI between October and September for the previous two years. For example, the 2016 increase was calculated as follows:
The maximum increase in any single year is 8%. Any increase above this level is carried forward, and applied in the next year when the adjustment is less than 8%.
The inflation protection feature is designed to protect your pension during your lifetime. For example, a pensioner who retired in December 2005, with an annual pension of $24,813 will receive $29,390 from OPTrust in 2016 – a 18% increase over a 10-year period.
Since the Plan’s inception, inflation adjustments have averaged 1.8%.
To find out how much your own pension will increase in 2016, view your Pensioner Information Change Statement available through secure Online Services or in print in early January, 2016.
Increase pro-rated for new pensioners
For OPTrust pensioners who retired in 2015, your inflation adjustment is prorated for the length of time you received a pension. For example let’s say you retired in June 2015, your pro-rated adjustment is calculated by the number of months you received a pension, divided by 12, times the 2016 increase.
In January 2016, your pension will increase by 0.65% to reflect the cost of living for six months. In the following years the full CPI will be applied to your OPTrust pension.
Consumer Price Index
The Consumer Price Index (CPI) is a measure, produced by Statistics Canada, of price movements. The CPI is calculated by comparing the retail prices of a representative “shopping basket” of goods and services at two different points in time. This “shopping basket” includes a range of goods and services including food, fuel, transportation, home energy and shelter.
For more information on the Consumer Price Index, visit the Statistics Canada website at www.statcan.gc.ca.