OPTrust pensions to increase by 2.5% starting January 2009Posted: November 25, 2008
November 25, 2008 – OPTrust pensions will increase by 2.5%, starting in January, 2009. 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 2.5% increase applies to all OPTrust pensioners who retired in 2007 or earlier. For retirees whose pension started after January 2008, 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 1.8%.
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 $22,000 will receive $ 29,135 from OPTrust in 2009.
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 2009 escalation factor and resulting 2.5% increase was calculated as follows:
The maximum increase in any year is 8%. 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 2008, 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, 2008, and started his or her pension in July, would have received six monthly payments in 2008. In this case the pro-rated increase for 2008 would equal 1.25% – or half the full year’s increase of 2.5%. Starting in 2010, 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.