COVID-19 updates: Click to read more. >>

Cost of Living Adjustment (COLA)


2021 COLA

Effective July 1, 2021, TRAF will pay a cost of living adjustment (COLA) of 0.73% to eligible members receiving a TRAF pension. The Consumer Price Index for Canada increased by 0.73% during 2020 (December over December).

You can compare COLA granted since 1977 by reviewing the historical COLA chart.

Restricted surplus

From 2008 to 2017, legislation imposed a cap on the amount of COLA to be granted each year, limiting it to a maximum of two-thirds of the increase in CPI. Any excess funds generated as a result of the limit were set aside as restricted surplus to support COLA granted after 2017. The total amount set aside as restricted surplus was $27,987,000 at December 31, 2017.

The Teachers' Pensions Restricted Surplus Regulation, 2017 requires this amount to be disbursed equally over a five-year period, commencing with the July 1, 2018 COLA. Accordingly, any COLA granted each year from July 1, 2018 to July 1, 2022 will include the use of $5,597,400 (20% of the total restricted surplus).

What is COLA?

COLA payments are meant to help offset inflation and are granted to the extent they can be funded by a separate account known as the Pension Adjustment Account (PAA). The PAA is funded by a portion of active members' contributions and investment earnings and is responsible for 50% of the COLA granted to eligible retired members or their beneficiaries. The Province funds the other 50% of the COLA as benefit payments are made.

How is it determined?

The maximum amount of COLA that can be paid each year is the lesser of:

(a) the change in the Consumer Price Index for Canada - December over the previous December, and

(b) the amount the PAA can support.

How much COLA will I receive each year?

Given the number of variables involved, it is difficult to predict the amount of future COLA.

The independent plan actuary has projected future COLA to be approximately 0.93% over the long term. Actual COLA is subject to annual fluctuations and there is no guarantee that a COLA will be granted every year. Annuities are not entitled to a COLA.

When will I receive COLA?

COLA is granted in July. You may be entitled to receive your first COLA in your 13th pension payment. In order to receive a full COLA, you must have received pension payments for 18 months prior to that COLA being granted. Otherwise, the COLA will be pro-rated based on the number of months you received a pension.

Will my beneficiary continue to receive COLA after I pass away?

COLA will continue for any plan option that provides ongoing pension payments after the death of a member. However, the beneficiary is only entitled to two-thirds of the COLA payment - that includes the cumulative COLA from the date your pension started to the present date, as well as for future COLA granted.

Example: When Joe retired in July 2005, he selected Plan C - Full to Last Survivor which provided him with a pension of $2,500 per month. He also receives $259 in COLA for a current total monthly payment of $2,759.

This is how the pension is impacted if either Joe or his wife Linda pass away. 



Joe's initial
pension
If Linda passes
away first,
Joe receives

If Joe passes
away first,
Linda receives

Basic monthly pension amount      
Plan C - Full to Last Survivor $2,500 $2,500 $2,500
Accumulated COLA amount $   259 $  259 $   173
Gross amount $2,759  $2,759 $2,673