How did we calculate the 2014 inflation adjustment?
January 24, 2014
We answer two common questions you might have about the rate:
- Why is Teachers' inflation adjustment rate different than the inflation rates reported in the media?
The media reports the annual change in the Consumer Price Index (CPI) for a specific month. We calculate our inflation adjustment by comparing the annual change in the CPI over a 12-month period. Instead of comparing September 2012 to September 2013, for example, we take a longer-view approach and compare the 12-month period ending on Sept. 30, 2013 with the 12-month period ending on Sept. 30, 2012. This approach helps us to smooth out any temporary spikes or decreases in the CPI.
- Why is the 2014 Teachers' base inflation adjustment rate lower than 2013's base adjustment rate of 1.9%?
We calculate our annual inflation adjustment rates using the Consumer Price Index (CPI). This is the most widely-used indicator of price changes across the country. Canada Pension Plan pensions, Old Age Security pensions and most major pension plans use the CPI when calculating their inflation adjustments.
Food, shelter, household and transportation represent about 75% of the CPI by weight. Over the past year, price increases in these categories have been about 1% lower than they were in the prior year.
To see the impact the 2014 adjustment will have on your Teachers' pension, log in to iAccess Web, visit the Inflation page, and watch the "My inflation increase" presentation.