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Understanding
inflation

 
 
 

Many
pension paths…

Select where you are in your career
(your pension depends on it)

 
 

On your way

Inflation protection is a feature of your pension plan that helps you keep up with the cost of living during your retirement.

Welcome!
Let’s get you on your way

Inflation protection is a feature of your pension plan that helps you keep up with the cost of living during your retirement.

You’re well on your way

Inflation protection is a feature of your pension plan that helps you keep up with the cost of living during your retirement.

You’re
almost there

Inflation protection is a feature of your pension plan that helps you keep up with the cost of living during your retirement.

 
 
 
 

Riding the waves

It’s also a tool we use to keep your pension healthy by adapting to the ever-changing economic and demographic tides.

Let’s explore how this works…

 
 
 
 
 
 
 

We determine your pension’s inflation using:

  • The Consumer Price Index (CPI)
  • Our funding status
  • When you taught

The 2016
inflation rate is:

1.3%

Safety in Numbers

The media compares the CPI for the current month to the same month a year earlier.

Jan 2014

 

Jan 2015

We compare the average CPI for a 12-month period to the same 12-month average a year earlier.

12-month average

 

12-month average

Our approach smooths out any price shocks that may have happened during the year.

Close
 
 
 
 
 
 
Why does
the news report a
different inflation rate from mine?

What’s in
the basket

We’re required to use Statistics Canada’s CPI (Consumer Price Index) to determine your inflation rate.

The CPI is an average of all the goods Canadians spend their money on.

Check out how the items in the basket have shifted over the years.

Basket share1

Dried lentils and frozen strawberries were added in 2011 to reflect Canadians’ healthier eating habits.2

Lower mortgage interest rates have decreased the weight of this line item.2

Canadians love being online, so the weight of internet service increased.2

Canadians took advantage of cheaper clothing, footwear and accessories, increasing this category’s weight in the basket.2

Canadians are on the move! Planes, trains and automobiles are all key items in this category, representing 1/5 of the basket.2

Canada’s population is aging, leading to the rise in the weight of medicinal and pharmaceutical products.2

Canadians are going further afield on their vacations. Europe was added to the list of popular travel destinations.2

Canadians are butting out so cigarettes’ weight in the basket is decreasing.2

The ups and downs

Every year we check the financial health of our plan. We do this to make sure we can pay pensions for the next 70 years and beyond.

Inflation protection is a lever that can be adjusted by our plan sponsors the Ontario
Teachers’ Federation
and the
Ontario Government  
in case of a funding surplus or a shortfall. This keeps the plan growing and your pension strong.

 
 
 
Slide the yellow dot to each year to see inflation protection in action. 2011: We projected a $17.2 billion funding shortfall, so inflation protection levels were scaled back to 60% for pension credit earned after 2009.

If we provided full inflation protection on all credit, the plan would have faced a preliminary shortfall of $10 billion.
2012: We projected a $9.6 billion funding shortfall, so inflation protection levels were scaled back to 50% for pension credit earned between 2010 and 2013 and 45% for post-2013 credit.

If we provided full inflation protection on all credit the plan would have faced a preliminary shortfall of $14.8 billion.
2014: Most of the preliminary $5.1 billion funding surplus was used to increase inflation protection levels for pension credit earned after 2009 to 60%.

If we provided full inflation protection on all credit, the plan would have faced a preliminary $13.6 billion shortfall.
2015: A portion of the preliminary $6.8 billion funding surplus was used to increase inflation protection levels to 70% for pension credit earned after 2009.

If we provided full inflation protection on all credit, the plan would have faced a preliminary $8.7 billion shortfall.
 
  • 2011
  • 2012
  • 2014
  • 2015

It balances out

CPI determined our rate, and then we looked at our funding status. Now, we turn to your time spent teaching.

As an early career teacher, most of your credit will be earned after 2009, so your inflation protection will largely depend on our funding status during your retirement.

CPI determined our rate, and we looked at our funding status. Now, we turn to your time spent teaching.

As a mid-career teacher, you earned some credit before 2010. That part of your pension will be fully protected against inflation.

But, inflation protection on the credit you earn after 2009 will depend on our funding status during your retirement.

CPI determined our rate, and we looked at our funding status. Now, we turn to your time spent teaching.

As a late-career teacher, you earned most of your credit before 2010, so only a small portion of your pension’s inflation protection will depend on our funding status during your retirement.

It all adds up

CPI determined our rate, and then we looked at our funding status. Now, we turn to your time spent teaching.

+
+

Pre–2010 100% of
inflation rate

Between
2010–2014
50–100%
of inflation rate

2014 and onwards 0–100%
of inflation rate

 
 

Finding
your footing

We can’t predict the future, or what our funding status will be when you are retired.

We do know you’ll still receive a solid pension based on how long you worked and how much you earned.

It’s never too early to start planning for your financial future.

We can’t predict the future, or what our funding status will be when you are retired.

We do know you’ll still receive a solid pension based on how long you worked and how much you earned.

You still have plenty of time to plan for your retirement. Make sure you understand all the sources of your retirement income–your Teachers’ pension, personal savings and government pensions.

Most of your pension will be fully protected, but you should still understand all the sources of your retirement income–your Teachers’ pension, personal savings and government pensions.

You may want to talk with a financial advisor before retiring so you understand your big financial picture.

Since you retired before 2010, you’ll get 1.3% (full inflation protection) on your entire pension.

 
 

A bright future starts now

Now that you understand the role inflation plays in keeping your pension healthy, we want to set you up for success.

Are you retirement ready?

The forest through the trees

Now that you understand the role inflation plays in keeping your pension healthy, see how it affects your retirement.

See your personal inflation details

 
 
 
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