Your monthly pension payment may increase to reflect increases in the cost of living.
Your monthly pension payment may increase as a result of an annual cost-of-living adjustment (COLA). Beyond providing lifetime pension benefits, granting COLAs that are sustainable over the long term and within the plan's long-term funding capacity is the second priority of BC's Municipal Pension Board of Trustees.
This adjustment may be added to your pension to help it keep pace with increases in the cost of living. COLA is based on:
- The change in the Canadian consumer price index (CPI) from September to September
- The COLA cap set by the board; for 2017-2019, the maximum COLA that can be applied is 2.1 per cent
- The funds available in the plan's inflation adjustment account
COLA is funded from the plan’s inflation adjustment account. This account holds a portion of member and employer pension contributions, and it earns investment income.
If the board decides to grant a COLA, it will take effect in January. Increases are applied to the lifetime portion of your pension. The COLA is also applied to the bridge benefit and the temporary annuity portion of your pension while you are receiving them.
The board follows specific rules when deciding to can grant a COLA for the year within three limits:
- The adjustment cannot be greater than the September to September increase in the CPI
- The adjustment cannot be higher than the COLA cap
- The cost of the adjustment cannot exceed the funding set aside to pay for COLA
For example, if the change in CPI from September to September is 1.0 per cent, the board can grant a COLA of a maximum of 1.0 per cent. If the change in CPI is 2.5 per cent and the current COLA cap is 2.1 per cent, the board can only grant a COLA of 2.1 per cent.
Although future COLAs are not guaranteed, once you have received an adjustment, it becomes part of your basic lifetime pension.
View the most-recent winter issue of Pension Life to find out if a COLA will be granted and, if so, its percentage. You can check the pension statement you receive in January to see the impact of the COLA on your monthly pension payment for the coming year.