OMERS announced that pensions will increase by 1.61% as of January 1, 2011. This increase reflects the change in the cost of living as reported by Statistics Canada in its Canadian Consumer Price Index (CPI).
Inflation protection is an important feature of OMERS pensions. A pension that is indexed to inflation, like OMERS, helps members keep pace with the rising cost of living, and adds to their retirement income security.
The maximum annual increase for OMERS pensions is 6% of the average increase in the CPI. If this figure is greater than 6%, the excess would be carried forward to the next year.
Members whose pensions began in 2010 will receive a pro-rated increase.
How the annual increase is calculated
OMERS uses the same method as the Canada Pension Plan (CPP) to calculate its annual increases for pensions. CPP rounds to one decimal place, while OMERS rounds to two decimal places.
OMERS determines the annual pension increase using the monthly average of the CPI for the 12-month period of November 2009 to October 2010. This is compared to the average for the same period the previous year. The percentage difference determines the increase for pensions.
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)
The CPI measures changes in the cost of living. It is based on the price of a fixed "basket" of goods and services that an average Canadian household would buy in a given month, including food, shelter, clothing, transportation, and health-care expenses. For more about CPI, please visit www.statcan.gc.ca.
In late December 2010, OMERS will mail an Annual statement of pension to retired members and survivors, with their updated pension amount for 2011.