Recent retirees will have some inflation protection restored
May 05, 2014
The $5.1 billion funding surplus that was announced in April will be used to partly restore inflation protection for teachers who retired after 2009.
The Ontario Teachers' Federation (OTF) and Ontario government, which jointly sponsor the Teachers' pension plan, use inflation protection as a tool to keep the pension plan in balance. In good times, when there is a funding surplus, the plan can afford to pay more in inflation protection than it can in times when there is a funding shortfall.
Members who retired after 2009 are directly affected by the decision to partially restore inflation protection. They will receive an annual pension increase of up to $50 in 2015, depending on individual circumstances, to restore forgone inflation increases. They will also receive a 2015 pension increase equal to 60% of the increase in the Consumer Price Index (CPI) on the portion of their pensions earned after 2009, up from the current level of 50%.
If you're a retired member and registered for iAccess Web, our secure member website, your personal 2015 inflation increase will be available online in October. If you're not registered for iAccess Web, you will be notified by mail about your personal 2015 inflation increase in January.
Members who retired before 2010 are not affected because these pensions continue to receive 100% inflation protection.
Working teachers are not directly affected because pension increases are calculated after a member retires.
In the Teachers' pension plan, inflation increases depend on three factors: first, changes in the cost of living in a given year, as measured by the CPI; second, the plan's funding status at the time; and third, when the member earned his or her pension credit. Only the portion of pension credit earned after 2009 is subject to variable, or conditional, inflation protection.
For more information, read, the full funding update or visit www.fundingyourpension.com.