Why is inflation protection for pensions earned before 1992 different than after 1992?

Prior to 1992, inflation protection was not pre-funded through contributions. As a result, it is granted on an ad-hoc basis under the terms of CAAT’s Funding Policy. The last ad hoc increases that applied to pensions earned before 1992 were paid in 2014.

Since 1992, member and employer contribution rates have increased, and conditional inflation protection is pre-funded. In other words, the higher contribution rates members currently pay are allowing for the conditional inflation increases that will apply to their pensions as long as the Plan is appropriately funded.

CAAT’s Funding Policy guides the Plan governors’ decisions relating to conditional inflation protection, based on the Plan’s funding level each year. Any changes to pre-1992 inflation protection would be a benefit improvement and could only be considered when the Plan is at funding level 5 or 6. To learn more about the Funding Policy, visit the Funding page.

It’s important to note that any previous ad-hoc increases granted to pension earned before 1992 are permanent.