Pension Life - Winter 2021
Your 2021 cost-of-living adjustment (COLA) is here
This COLA provides you with some inflation protection. COLAs are not guaranteed, but once a COLA is granted, it becomes part of your lifetime pension. It also applies to your bridge benefit and temporary annuity, if applicable.
Each year, the board decides whether to grant a COLA according to these guidelines:
- Amount can’t be higher than the increase in the Canadian consumer price index (CPI)
- Cost can’t exceed the funds in the inflation adjustment account (IAA)
- Maximum amount can’t be greater than the COLA cap
Where does the money for COLAs come from?
When you were working, most of the contributions you and your employer made went into the basic account. This funds your lifetime pension. Some went into the IAA. This account is made up of your contributions, employer contributions and returns on investment. Money in the IAA is used for funding COLAs.
What is the CPI?
Statistics Canada measures changes in prices of about 600 goods and services every month. In the 12 months ending September 2020, the average price increase (the CPI) was 0.5 per cent.