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OPTrust pensions to increase by 1.8 per cent in 2008"

posting date Posted: November 21, 2007

November 21, 2007 - OPTrust pensions will increase by 1.8 per cent, starting in January, 2008. The adjustment is the result of the OPSEU Pension Plan's inflation protection provision and reflects the rise in the cost of living in Canada.

The full 1.8 per cent increase applies to all OPTrust pensioners who retired in 2006 or earlier. For retirees whose pension started after January 2007, the increase will be pro-rated based on the month the pension started. The annual increase also applies to OPTrust survivor pensions and to the deferred pensions of former and divested OPTrust members . Last year's increase was 2.3 per cent.

Lifetime protection

Under OPTrust's inflation protection feature, retirees' pensions increase every January, based on changes in Canada's Consumer Price Index (CPI). The result is protection for the buying power of retirees' pensions - and security for the future.

Even with inflation continuing at historically low levels, OPTrust's annual pension increase can make a big difference over time. For example, a pensioner who retired in 1995 with an average pension of $20,000 will receive $25,840 from OPTrust in 2008.

How OPTrust calculates the annual increase

OPTrust calculates the annual increase by dividing the CPI average for the two 12-month periods ending the previous September. The 2008 increase was calculated as follows:

Average CPI - October 2006 to September 2007

Average CPI - October 2005 to September 2006

 = 

110.8

108.8

 = 

1.8%

The maximum increase in any year is 8 per cent. An increase above that level is carried forward and applied in the next year when the adjustment is below 8 per cent.

Increase pro-rated for new pensioners

For new pensioners who retired in 2007, the increase will be pro-rated to reflect the number of months the retiree received a pension over the year.

For example, a member who retired in June, 2007, and started his or her pension in July, would have received six monthly payments in 2007. In this case the pro-rated increase for 2008 would equal 0.9 per cent - or half the full year's increase of 1.8 per cent. Starting in 2009, this retiree will receive the full annual increase each January.

For more information

More information about inflation protection and the OPSEU Pension Plan is available in the OPTrust fact sheet on Inflation Adjustments.