What is COLA?

Featured Image

When you retire, cost-of-living adjustments (COLA) increase your pension annually, helping you stay ahead of inflation.

Cost-of-Living Adjustments Overview

Cost-of-living adjustments (COLA) 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 you stop participating in the plans and are entitled to receive a pension in the future and you decide to leave your pension benefit in the plan, your deferred pension will accumulate any cost-of-living increases that are granted during the deferral period.

How COLA is Calculated

The Teachers’ Pension Plans Act defines the method used to determine the COLA adjustment applicable to your pension. COLA is a measure of the change in the Alberta Consumer Price Index (ACPI) monthly values reported by Statistics Canada.

It is determined by taking the sum of the 12 most recent ACPI values (leading months, ending October 2020) and dividing by the sum of the previous 12 months (trailing months, ending October 2019).

The rate of 1.30% effective January 1, 2021, is calculated as follows:

Total ACPI (November 2019 to October 2020)
______________________________________
Total ACPI (November 2018 to October 2019)

[(1,733.00 / 1,710.70 ) – 1] = 0.0130.
Rounded to three decimal places = 0.013 or 1.30%

Below are the monthly ACPI values to show you how we arrived at the above calculation.

The plan sponsors, i.e. 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 prior to 1993) and 70% of ACPI (for service after 1992). As a result, effective January 1, 2021, pensions will increase by 0.78% for pensionable service prior to 1993 and by 0.91% for pensionable service after 1992.

COLA Calculation

ACPI Values Nov 2018-Oct 20202018/19 ACPI2019/20 ACPI
November140.7143.6
December140.5143.7
January140.5144.7
February142145.5
March143.1144.1
April143.7143
May144144.1
June142.7145
July143.4144.2
August141.6143.4
September142.9145
October143.6145.2
Total1710.71733