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 as of January 1, 2017 is 1.45%.

  • In December, we send retired members and survivors 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 as of January 1, 2017 is 1.45%:

[CPI average 12 months (Nov. 2015 to Oct. 2016)/ CPI average 12 months (Nov. 2014 to Oct. 2015) – 1] x 100

[128.09/126.26 – 1] x 100 = 1.45% (rounded to two decimal places)

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 1.9%.

OMERS pensions have averaged 1.9% per year in inflation increases since 2000

2017 1.45% 2008 1.99%
2016 1.16% 2007 0.70%
2015 1.80% 2006 3.36%
2014 0.90% 2005 1.79%
2013 1.81% 2004 2.16%
2012 2.84% 2003 2.30%
2011 1.61% 2002 2.60%
2010 0.37% 2001 2.70%
2009 2.51% 2000 2.58%

For example, using an inflation assumption of 2% per year, an OMERS pension of $15,000 today, would be worth the following in the future:

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 2016. The increase as of January 1, 2017 is 1.45%. So for example, if your pension started in February 2016, your 2017 increase would be 1.21% (which is 10/12 of 1.45%). In January 2018, however, you would receive the full increase.

For a pension that began in… Pro-rating (first increase only)
January 2016 11/12
February 2016 10/12
March 2016 9/12
April 2016 8/12
May 2016 7/12
June 2016 6/12
July 2016 5/12
August 2016 4/12
September 2016 3/12
October 2016 2/12
November 2016 1/12
December 2016

 

0/12
A pension that began in December 2016 will not get an increase in January 2017, but will get an increase in January 2018.

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%.

Tip!

To see the effects of inflation, try the Bank of Canada's inflation calculator.

Advice From Our Members

OMERS helped me with… “Peace of mind, the confidence in knowing that my pension cheque will always be there and not be eaten away by inflation.”