Indexing Explanation

The indexing rate for 2012 is 2.8%. 

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 2012 pension increase.

Month/Year	CPI* %	Month/Year	CPI* %
October 2009	114.6	October 2010	117.4
November 2009	115.2	November 2010	117.5
December 2009	114.8	December 2010	117.5
January 2010	115.1	January 2011	117.8
February 2010	115.6	February 2011	118.1
March 2010	115.6	March 2011	119.4
April 2010	116.0	April 2011	119.8
May 2010	116.3	May 2011	120.6
June 2010	116.2	June 2011	119.8
July 2010	116.8	July 2011	120.0
August 2010	116.7	August 2011	120.3
September 2010	116.9	September 2011	120.6
Total	1,389.8	Total	1,428.8
Monthly Average	115.8	Monthly Average	119.1

* The Consumer Price Index, September 2011, Statistics Canada, Catalogue no. 62-001-X, monthly.

The pension increase (indexing rate) for 2012 is the percentage increase in the monthly average CPI. This is calculated by subtracting the monthly average for the first period (October 2009 to September 2010) from the average for the second period (October 2010 to September 2011), then dividing this amount by the monthly average for the first period and finally multiplying it by 100, as follows:

119.1 − 115.8 = 3.3

(3.3 ÷ 115.8) × 100 = 2.8% (indexing rate for 2012)

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.