Cost of Living Adjustment (COLA)


2019 COLA

Effective July 1, 2019, TRAF will pay a cost of living adjustment (COLA) of 1.23% to eligible members receiving a TRAF pension. The Consumer Price Index for Canada increased by 1.99% during 2018 (December over December).

You can compare COLAs 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 2/3 of the increase in CPI. Any excess funds generated as a result of the limit were set aside as restricted surplus to support COLAs 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, enacted on May 18, 2018, 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 (one-fifth of the total restricted surplus).

What is COLA?

COLA payments are meant to offset inflation. Since 1977, all member contributions have been divided into two accounts. The majority goes into the "basic" account that pays pensions; the balance goes into the Pension Adjustment Account (PAA) which funds half the cost of living adjustment. The other half is paid by the Province.

When do I receive the COLA?

You are entitled to your first COLA in the 13th month after you have received your pension for 12 months. The first COLA will be pro-rated for the number of months you have received a pension in the previous calendar year. Further COLA will be paid each July thereafter based on the determined adjustment.

Annuities are not entitled to a COLA.

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 afford.

Do I get a COLA every year?

There is no guarantee of a COLA.

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 2/3 of the COLA payment - that includes the cumulative COLA from the date your pension started to the present date, as well as for future COLAs 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 a $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