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Inflation protection
- Members
- How your plan works
- Inflation protection
Cost of living increases
Once you retire, your monthly pension may increase to protect against increases in the cost of living.
What is inflation protection?
Inflation protection is a valuable benefit designed to increase the amount of your monthly pension in pay through a cost-of-living adjustment based on the increase in the Canadian Consumer Price Index (CPI). The cost-of-living adjustment is also sometimes referred to as indexation.
Statistics Canada measures monthly changes in the cost of living. Each month, it examines the price of a basket of goods and services typically purchased by Canadian households and compares the ups and downs to the previous month. This is called the Consumer Price Index (CPI). The CPI is widely used as an indicator of the change in the general level of consumer prices and the rate of inflation. Find more information about the CPI on the Statistics Canada website .
Does UPP offer inflation protection?
When you retire and begin receiving your pension, the portion attributable to UPP benefits will be subject to funded conditional indexation. This means that any indexation adjustments will be determined by UPP’s Joint Sponsors. UPP’s target funded conditional indexation is 75% of the increase in CPI for Canada but may be less based on the Plan’s overall financial health and Funding Policy. Indexation of your UPP benefits is not guaranteed, meaning if an indexation adjustment is made in any given year, it does not necessarily mean an adjustment will be made in any future year.
Once the indexation adjustment has been made, it is permanently applied to your retirement income, and your pension will never be reduced.
If you have pre-conversion pension service
As part of the conversion to UPP, UPP honours the pension adjustment provisions of your prior plan. This includes how adjustments are determined/calculated and when they are paid.
If your prior plan had inflation protection, it will still apply to your benefits earned under that plan. Prior plans have varying dates and definitions of inflation protection that only apply to benefits earned under those prior plan provisions. Please contact UPP Member Services for details.
What is the inflation protection increase for 2024?
In 2024, pensions in pay for UPP’s retired members, survivors, and dependents are indexed at the full 75% for UPP service accrued on and after July 1, 2021, meaning a 3.54% increase to the post-conversion portion of their pensions.
Determining the inflation protection increase for January 1, 2024:
(a)= 155.88
(b) = 148.84
=
Increase in CPI
4.73%
75% of the 4.73% increase = 3.54%
(a) the CPI 12-month average (with each month determined at month end) for the period ending on the September 30 immediately before the January 1 effective date;
divided by
(b) the CPI 12-month average (with each month determined at month end) for the period ending on the September 30 immediately before the September 30 in (a) above.
Note: if (a) is less than (b), the increase in CPI shall be 0%.
The indexation paid by UPP is equal to 75% of the percentage change in the two averages of CPI.
Who receives UPP’s inflation protection 2024 increase?
All members who began receiving a UPP pension prior to 2024, including survivors and dependents in pay, will receive the 2024 inflation protection increase. UPP’s inflation protection increase is only applicable to the UPP portion of your pension for service on and after July 1, 2021.
Frequently asked questions
My pension plan converted to UPP. Why doesn’t this indexation apply to my pre-conversion pension?
As part of the conversion, UPP honours the pension adjustment provisions of your prior plan for your service earned under that plan. This includes how adjustments are determined/calculated and when they are paid. If you had already retired when your prior plan converted to UPP, your entire pension is adjusted based on your prior plan’s terms.
If you have prior service under a pension plan that converted to UPP, your total pension benefit comes to you as one payment but has two parts – one portion attributable to the service earned on your prior plan, and the portion attributable to what you earned under UPP.
How much does my pre-conversion pension increase this year?
Your pre-conversion benefit will be increased based on the pension adjustment provisions of your prior plan. You will be notified by direct mailing regarding the amount of the adjustment, if any, and when it will be added to your pre-conversion benefit.
Why is my increase less than 3.54%?
If you started to receive your pension in 2023, your indexation amount is prorated for the length of time you received a pension. For example, if you retired in June 2023, your indexation is based on the six months you received a pension this year, and you will receive 50% of the 3.54% increase.
- © 2024 University Pension Plan