Cost-of-Living Adjustments (COLA)

What is COLA?

Cost-of-living adjustments (COLA) are an inflation adjustment to your pension, based on the measure of the change in the Alberta Consumer Price Index (ACPI) monthly values reported by Statistics Canada.

These adjustments are effective each January and are applied to your ATRF pension (including the Advance & Reduction Option) before income tax is deducted.

For the pension payable on pensionable service to December 31, 1992, the COLA is calculated at 60% of the change from year to year in the Alberta Consumer Price Index (ACPI).

For the pension payable on pensionable service from January 1, 1993, the COLA is calculated at 70% of the change from year to year in the ACPI.

Plan members who received a pension for less than 12 months in the previous year receive a pro-rated adjustment.

Deferred Pension

If a member stops participating in the plans but has enough pensionable service to receive a pension in the future, and they decide to leave their pension benefit in the plan, their deferred pension will accumulate any cost-of-living increases that are granted during the deferral period.

Pension Information Statements 

After retirement, members receive a Pension Information Statement that is prepared in January. The statement will show their updated pension payment amount (with the COLA amount), including the impact of any income withholding tax changes.

Alberta Consumer Price Index

The Alberta Consumer Price Index (ACPI) measures the average price change of goods and services purchased by Alberta consumers, by comparing the cost of a fixed basket of goods and services from different time periods.

Price indices are based on such things as the increase or decrease of natural gas, electricity, and homeowner replacement costs, which fluctuate from year to year.

There are eight major components (listed below), each with a specific weighting of the fixed basket.

1. Shelter
2. Transportation
3. Food
4. Recreation, Education & Reading
5. Household Operations, Furnishings & Equipment
6. Clothing & Footwear
7. Health & Personal Care
8. Alcoholic Beverages & Tobacco

Plan Sponsors' Decision on COLA

The plan sponsors of the teachers’ pension plans (the Alberta Teachers’ Association and the Alberta Government) agreed, as part of a joint Memorandum of Understanding in 1992, to use the factors of 60% of ACPI (for service to December 31, 1992) and 70% of ACPI (for service from January 1, 1993).

The cost of each factor is funded through contribution rates. The cost of the 60% factor is shared equally by teachers and the Alberta Government, and for private schools, the employer, but the cost of the extra 10% is the responsibility of teachers. The incremental cost of a 100% COLA was not considered to be affordable by either sponsor at that time.

How is COLA Calculated?

The Teachers’ Pension Plans Act defines the method used to determine the COLA as the most recent 12-month period ending October 31 compared to the previous 12-month period ending October 31. This method is the same used by other major pension plans. The Canada Pension Plan and Ontario Teachers’ Pension Plan both use the Canadian Consumer Price Index (CPI), not the ACPI which is specific to Alberta’s economy.

COLA is determined by taking the sum of the 12 most recent ACPI values (leading months, ending October 2024) and dividing by the sum of the previous 12 months (trailing months, ending October 2023).

The rate of 2.90% effective January 1, 2025, is calculated as follows:

Total ACPI (November 2023 to October 2024)
______________________________________
Total ACPI (November 2022 to October 2023)

[(2,018.2 / 1,960.9) – 1] = 0.0292.
Rounded to three decimal places = 0.029 or 2.90%

Current COLA

Effective January 1, 2025, pensions will increase by:

• 1.74% for pensionable service to December 31, 1992.
• 2.03% for pensionable service from January 1, 1993.