Indexing (Inflation Protection)

Did you know that your pension is indexed to the increases of the cost of living? This feature of your pension plan is important because it is difficult to evaluate future pricing of goods and services – in other words, to be able to anticipate inflation through your retirement years and to plan your retirement savings accordingly.

Increase
Your pension benefits increase each January to take into account increases in the Consumer Price Index (CPI). The increase is determined by taking the average CPI for goods and services of a 12-month period and comparing it to the previous 12-month average CPI. If there is no change in the CPI, or if it drops, your pension will not be adjusted. 

Pension Adjustment
This adjustment for inflation is made both for pensions in pay and for deferred pensions. In the case of deferred pensions, your pension will be increased by the total accumulated percentage increases (indexing) from the date you ceased to be employed in the Public Service.

The following chart shows how different rates of inflation can affect your pension. It also shows a pension decrease at age 65 because your Public Service pension is reduced due to the Integration with the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP).

Your pension increases with inflation

For example, if at age 65, you receive an annual pension of $20,000, in ten years from now, you would receive $26,880 (with a 3% annual inflation rate) or $32,580 (with a 5% annual inflation rate).

For further information on indexing, please consult the Inflation Protection (Indexing) in the FAQ.