Pension Life - Winter 2021
Your 2021 COLA is 1.0 per cent
Your pension is keeping up with inflation. Effective January 1, 2021, you received a cost-of-living adjustment (COLA) of 1.0 per cent. The COLA matches the annual change in the Canadian consumer price index (CPI) in the 12-month period up to and including October 31, 2020.
If you retired partway through 2020, your COLA will be pro-rated based on the number of months in 2020 you received a pension.
College Pension Plan rules allow us, the College Pension Board of Trustees, to grant an annual COLA equal to the CPI. While not guaranteed, COLAs help maintain the purchasing power of your pension and, once granted, become part of your basic pension and, if applicable, of your bridge benefit and temporary annuity for as long as you receive them.
As we announced in the summer edition of Pension Life, the COLA cap (a limit on the COLA the board can grant each year) was suspended as a result of the plan’s most recent valuation, measured as at August 31, 2018.
Your pension is safe and secure
During the pandemic, you have no doubt been concerned not only about your health and the health of loved ones but also about your pension.
We want to assure you that your pension benefit is safe and secure and is financially well positioned to withstand market downturns.
How do we know this? The plan’s valuation showed the plan was 106.1 per cent funded, meaning it had more money than required to pay all current and predicted future pensions. Additionally, the plan’s 10-year returns up to August 31, 2020 (the most recent annual figures available), stood at 8.8 per cent, exceeding the actuarial assumption (in essence, the investment goal) of 6.25 per cent.
The plan has been around for more than 50 years and provided retirement security through many economic crises, including the 1987 market crash, the collapse of the dot- com bubble in 2000 and the financial crisis of 2008–2009. Over time, the economic challenges caused by the pandemic will also pass.
We hope that knowing your pension is safe and secure provides some peace of mind.