Keeping pace: Your 2013 inflation adjustment

November 27, 2012

Joseph Rapai, of London, Ont., worked in education for 37 years before retiring in 2007. Since he retired, he's explored new ventures and continues to push boundaries. The fact that his Teachers' pension increases each year to keep pace with inflation has contributed to the freedom to do so, he says.

In 2013, the base inflation adjustment will be 1.9%. "My Teachers' pension is a safety net. Each year that my pension is adjusted to keep up with the cost of living takes some of the pressure off day-to-day life." Joseph says.

In the five years since he retired, Joseph has been exploring the new terrain of social media. He's using his enthusiasm for social media to fuel another passion—business development for Fiat of London. Joseph manages the social media presence of the Italian automaker's London, Ont. sales studio, including Facebook, Twitter, Pinterest and YouTube.

"Teachers are used to being a part of a community. When you retire, there's a real potential for a shock to set in. Staying active, connected and involved in something you feel passionate about is important—whether it's your family, your friends, or discovering a new hobby."

Joseph credits social media for making those connections possible, and the security of his Teachers' retirement income with allowing him to take those leaps in his retirement.

The Basics

Joseph retired before 2010, so his full Teachers' pension receives the 1.9% adjustment.

If he had retired after 2009, he would be affected by conditional inflation protection (CIP). With CIP, any service credit that was earned before 2010 is fully indexed. The portion of his pension based on service credit earned after 2009 would receive 60% of the 1.9% inflation adjustment (1.14%).

If Joseph retired in 2012, his inflation adjustment would be prorated. He would receive the adjustment for the time he was on pension in 2012.

The chart below shows the impact the three scenarios outlined above would have on a $51,000 pension.