UPDATED – cost of living for 2022 pensions announced

UPDATE – Jan 14 2022

This week the BC Teachers’ Pension Plan formally confirmed what we had expected: BC Retired Teachers will receive a 4.4% cost of living adjustment effective January 2022. This represents the full amount inflation shown in the Canadian Price Index for the one year period ending September 30, 2021.

Protection against inflation is critical to guard against an erosion of our buying power. BC retirees can be grateful that we have been receiving full inflation coverage over the past few years, thanks to the TPP’s foresight in implementing and funding an Inflation Adjustment Account.

Retirees in other jurisdictions are not nearly as fortunate. Here is a partial survey of the cost of living adjustments experienced by other retiree groups across Canada:

• Federal Retirees: 2.4%
• Newfoundland and Labrador: a maximum of 1.2 percent
• Nova Scotia: COLA will be 0% from July 1, 2021 to June 30, 2022.
• New Brunswick: 1.46%
• PEI: 0.61%
• Quebec: A complicated formula that yields about .5%
• Ontario: 2.4%
• Manitoba: the 20-year average COLA is just 51% of CPI
• Saskatchewan: 2.2%
• Alberta: 1.56% for pre-1993 service, and 1.8% for later service.
• And the BC Municipal Pension Plan has just granted its retirees 2.1%

PEPSI, COKE, OR JUST PLAIN COLA?

You may have seen reports in the media that during this period of economic recovery, Canada is seeing a rise in inflation rates.

In retirement, we collect our guaranteed monthly pension payments, and in the Teachers’ Pension Plan (TPP) we have also received an annual cost-of living adjustment (COLA), which helps keep pace with increases in inflation. Our pension plan has a special Inflation Adjustment Account which is designed to fund those inflation amounts.

Once established, our lifetime pension amounts are guaranteed, but the COLA increases are not guaranteed. To quote the TPP website:

Each year, the Teachers’ Pension Board of Trustees carefully considers various factors to decide whether to approve a COLA – and if so, its value. If the board grants an adjustment, it will take effect in January and is applied to your monthly pension payment (and any bridge benefit and/or temporary annuity you may be receiving).

The decision is based on two factors:
• The annual change in the 12-month average Canadian consumer price index (CPI)
• The funds available in the plan’s IAA

So, with inflation in the news lately, what does that mean for retired teachers?

The latest Consumer Price Index number (September 30, 2020, to September 30, 2021) shows a cost-of-living increase of 4.4%. The Teachers’ Pension Plan Board of Trustees will evaluate if they believe the Inflation Adjustment Account is well enough funded to support the full increase.

In recent years the full CPI increase has been covered. Over the past ten years, due to compounding of the increases listed below, our guaranteed pensions have increased by more than 17%.

The BCRTA Pensions and Benefits Committee monitors the annual COLA decision carefully. So stay tuned for the announcement of the Teacher Pension Board of Trustees’ decision!

Arnie Lambert
Chair, Pensions and Benefits Committee