Inflation protection

Your CAAT pension includes conditional inflation protection increases.

PLAN FEATURES

Understand your annual increase

Inflation refers to the increase in the prices of goods and services over time. Pension plans can help offset the negative impact of inflation by providing inflation protection, in the form of periodic increases to the amount of a pension payment. These increases help reduce the erosion of buying power caused by inflation.

In the CAAT Plan, when members retire, their initial pension payment is called the "lifetime pension." Inflation protection, when it is granted, is added to the lifetime pension each year that the Consumer Price Index (CPI), a widely-used measure of inflation in Canada, has increased. The new amount is the new lifetime pension. In other words, inflation protection is cumulative. Once inflation protection has been paid, it is a permanent addition to your retirement income.

Here are the top 5 questions members ask about inflation protection

You’ll receive a letter in the mail in December detailing the increase to your pension (if any) for the upcoming year. Then, in January, you’ll receive a pay statement showing the amount of your January pension deposit.

The inflation protection that may be applied to your pension is based on when you earned your pension.

Conditional inflation protection applies to the pension earned in the CAAT Pension Plan after 2007.
For pensions earned in the CAAT Pension Plan between 1992 and 2007, inflation protection increases are guaranteed and will be granted indefinitely.
For pensions earned in the CAAT Pension Plan before 1992, no inflation protection increases are applicable. The last scheduled “ad hoc” inflation protection increase was January 1, 2014. If you earned service prior to 1992, your pension will not decrease as a result of the end of ad hoc pre-1992 inflation. Prior increases will remain a permanent part of your pension.

Conditional inflation protection means increases are conditional on affordability – the Plan’s funded status must be at level 2 and above on the Funding Policy. The most recent valuation guaranteed funding for inflation protection to (at least) 2027.

In the CAAT Plan, inflation protection is calculated based on changes to the previous year’s Consumer Price Index (CPI). The CPI, calculated by Statistics Canada, is considered a reliable measure of inflation.

The annual rate is calculated using a method called the “average method.” The average CPI for the 12-month period ending in September of the current year is compared to the average of the 12-month period ending in September of the previous year. The inflation protection increase paid by the Plan is equal to 75% of the percentage change in the two averages of CPI.

The maximum increase in a year is 8%. In years when inflation is high, any amount above the 8% would be carried forward and applied to inflation protection in following years. This carry forward is referred to as “banking.” If there is no increase in the September CPI of a given year, there will be no increase to pensions in the following year.

CAAT’s AIW increase on January 1, 2026, is 4.73%

What is Average Industrial Wage (AIW)? AIW is the annual increase to pensions being earned in DBplus, to align with salary increases.

AIW applies to the total DBplus pension members earned up to the end of 2025. It also applies to members in the 24-month Extension of Membership period.

Year	% Increase
2026	4.73%
2025	4.02%
2024	2.99%
2023	2.48%
2022	5.43%
2021	4.98%
2020	2.25%
2019	2.72%

More about inflation protection

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