Pension Indexing Changes
The WLU Pension Plan provides an annual indexing adjustment for retiree’s pensions. Currently, the plan provides an annual adjustment to the Minimum Guarantee Pension equal to 100 per cent of the increase in the Consumer Price Index for the previous year, to a maximum of 4 per cent. This has been changed for service accrued under the Minimum Guarantee Pension Benefit on or after Jan. 1, 2013 – the Minimum Guaranteed Pension Benefit will be adjusted annually by an amount equal to 50 per cent of the increase in the Consumer Price Index (CPI) for the previous year, to a maximum adjustment of 4 per cent. Since the change applies only to service accrued from Jan. 1, 2013 forward, employees who retire with service accrued before this date will receive a blended adjustment rate as per the example below.
- Member retiring with 15 years of service prior to 2013 and 15 years of service after 2013.
- If CPI in the previous year is 2.5 per cent, this member would receive a blended indexing rate of approximately 1.9 per cent or 75 per cent of CPI (2.5 per cent for service accrued up to Jan. 1, 2013 and 1.25 per cent for service accrued after Jan. 1, 2013).
It is important to note that the indexing formula applicable to the Money Purchase Pension, which is based on the average investment returns in the plan over the previous four years since retirement, has not changed. The Money Purchase Pension and the Minimum Guarantee Pension are adjusted annually and the retiree receives the higher of the two.