Indexing Explanation

The indexing of public service pension plan benefits is governed by two pieces of legislation; the Public Service Superannuation Act (PSSA) and the Supplementary Retirement Benefits Act (SRBA).

Pension increases for retired members and their survivors are calculated each year using Consumer Price Index (CPI) data published by Statistics Canada. In accordance with the SRBA, the increase is based on a comparison of the twelve-month average of the monthly CPI for the year just ended, to the twelve-month average of the monthly CPI for the previous year. The SRBA specifies that the twelve-month period from October 1 to September 30 is to be used to calculate the increase payable the following January. The index used for the calculation is the CPI for Canada for All Items (not seasonally adjusted).

As an illustration, outlined below are the data used to calculate the pension increase of 0.5% for 2010.

Month/Year	CPI* %	Month/Year	CPI* %
October 2007	111.6	October 2008	114.5
November 2007	111.9	November 2008	114.1
December 2007	112.0	December 2008	113.3
January 2008	111.8	January 2009	113.0
February 2008	112.2	February 2009	113.8
March 2008	112.6	March 2009	114.0
April 2008	113.5	April 2009	113.9
May 2008	114.6	May 2009	114.7
June 2008	115.4	June 2009	115.1
July 2008	115.8	July 2009	114.7
August 2008	115.6	August 2009	114.7
September 2008	115.7	September 2009	114.7
Total	1,362.7	Total	1,370.5
Monthly Average	113.6	Monthly Average	114.2

* The Consumer Price Index, September 2009, Statistics Canada, Catalogue no. 62-001-XPE, monthly.

The pension increase (indexing rate) for 2010 is the percentage increase in the monthly average CPI. This is calculated by subtracting the monthly average for the first period (Oct/07 to Sep/08) from the average for the second period (Oct/08 to Sep/09), then dividing this amount by the monthly average for the first period and finally multiplying it by 100, as follows:

114.2 - 113.6 = 0.6

(0.6 ÷ 113.6) x 100 = 0.5% (indexing rate for 2010)

It is important to note that the calculation of the increase payable each January does not include the monthly increases for the last three months of the previous year (October to December). These rates will be incorporated in the following year's calculation.