Inflation Protection

OMERS pensions that receive an annual inflation increase include normal and early retirement pensions, as well as survivor, deferred and disability pensions. The increase for 2011 is 1.61%.

• In December, we send retired members a personalized Annual statement of pension showing the details of their January pension increase.

How Inflation Protection Works

• Each January, your OMERS pension increases by 100% of the increase in the Canadian Consumer Price Index (CPI), up to a maximum of 6%. If the CPI is greater than 6%, the excess is carried over for use in future years.
• The CPI measures the cost of living based on the price of a basket of goods that an average Canadian household would buy in a given month. The basket includes food, housing, transportation, energy, furniture, clothing and recreation. More about the CPI is at Statistics Canada's website. 

How OMERS Calculates the Annual Inflation Increase

OMERS uses the monthly average of the CPI for a 12-month period ending in October, and compares it to the monthly average for the same period the previous year. The percentage determines the increase for pensions. For example, the inflation increase for 2011 is 1.61%:

CPI average 12 months (Nov 2009 to Oct 2010) – 1 x 100 = % pension increase
CPI average 12 months (Nov 2008 to Oct 2009)

116.0500 – 1 x 100 = 1.61% (rounded to two decimal places)
114.2167

OMERS method of calculating the annual inflation increase is consistent with the method used by the Canada Pension Plan (CPP). OMERS rounds to two decimal places, while CPP rounds to one decimal place.

Since the year 2000, OMERS pensions have had an average annual increase of 2.06%.

OMERS pensions have averaged 2.06% per year in inflation increases since 2000
2011	1.61%	2005	1.79%
2010	0.37%	2004	2.16%
2009	2.51%	2003	2.30%
2008	1.99%	2002	2.60%
2007	0.70%	2001	2.70%
2006	3.36%	2000	2.58%

An OMERS pension of $15,000 today, using an inflation assumption of 2% per year, would be worth the following in the future, to keep pace with rising prices:

Today:	$15,000
10 years:	$18,285
15 years:	$20,188
20 years:	$22,289
25 years:	$24,609
30 years:	$27,170

A pension that didn't offer inflation increases would still be $15,000.

How Your First Increase Is Pro-rated

Your first increase is pro-rated to reflect the number of months you received a pension in 2010. The increase for 2011 is 1.61%. So for example, if your pension started in March 2010, your 2011 increase would be 1.21% (which is 9/12 of 1.61%). In January 2012, however, you would receive the full increase.

For a pension that began in…	Pro-rating (first increase only)
January 2010	11/12
February 2010	10/12
March 2010	9/12
April 2010	8/12
May 2010	7/12
June 2010	6/12
July 2010	5/12
August 2010	4/12
September 2010	3/12
October 2010	2/12
November 2010	1/12
December 2010	0/12 A pension that began in December 2010 will not get an increase in January 2011, but will get an increase in January 2012.

Inflation Facts

• Before 1992, the yearly pension increase was made on an ad hoc basis.
• In 1992, OMERS introduced guaranteed inflation protection of 70% of the CPI increase, with a possible top up to 100% if approved by the OMERS Board, up to a maximum of 6%.
• In 1999, the guarantee was increased to 100% of the CPI, up to a maximum of 6%.