Indexing—Canadian Armed Forces pensions

Indexing is inflation protection which is applicable to all Canadian Armed Forces (CAF) pensions and is administered in accordance with the provisions set out in Part III of the Canadian Forces Superannuation Act (CFSA), Division 3 of the Reserve Force Pension Plan Regulations, and the Supplementary Retirement Benefits Act (SRBA).

Annual pension increases are determined by increases in the Consumer Price Index (CPI) and are announced by Treasury Board in late fall of each year. The initial increase (if the pensioner was released from the CAF prior to June 22, 1982) is based on the cumulative increases from January 1 of the releasing year to December 31 of the year prior to the entitlement being applied. In the case of a former CAF member who was released on or after June 22, 1982, the initial increase is based on the cumulative increases from the 1st day of the 1st full month following the month in which the member received a pension.

Once the CAF pensioner has received the initial cumulative increase, annual increases are applied in January of each year thereafter. All CAF pensioners receive an annual information bulletin about indexing each January.

You may want to know

When will my Canadian Armed Forces pension first become indexed?

Normally, on the 1st of the month of your birthday, between the ages of 55 and 60, depending on how many full years of pensionable service you have to your credit.

The first increase will never commence later than age 60. If, prior to your normal entitlement age, you become disabled and are in receipt of Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) disability benefits, contact the Government of Canada Pension Centre to apply for early indexing.

If you are entitled to indexing at retirement, your first indexing increase will be implemented on January 1 of the year following your year of retirement. This amount will be pro-rated to reflect the number of full months remaining in the year of your retirement. In subsequent years, you will be entitled to the full increase.

Once you are entitled to indexing, your pension is increased on January 1 of each year to take into account the cost of living, based on increases in the CPI.

Who is entitled to indexing?

  • Persons whose number of complete years of pensionable service when added to their age totals 85 commencing at:
    1. age 55, if pension is based on 30 or more years of pensionable service
    2. age 56, if pension is based on not less than 29 years of pensionable service
    3. age 57, if pension is based on not less than 28 years of pensionable service
    4. age 58, if pension is based on not less than 27 years of pensionable service
    5. age 59, if pension is based on not less than 26 years of pensionable service
    6. age 60, if pension is based on less than 26 full years of pensionable service
  • All survivor allowance recipients, including children, regardless of age
  • Persons in receipt of a pension who are under 60 years of age and who:
    1. were disabled, as defined under Part I of the CFSA or para. 43(1)(d) of the RFPPR, as applicable, at the time of their retirement from the Canadian Armed Forces

      Note: Members who were released on medical grounds prior to April 1, 1991 are not automatically entitled to the increase and must qualify under paragraph ii below or based on their complete years of pensionable service when added to their age as described above

    2. have become disabled to the extent that they are incapable of regularly pursuing any substantially gainful occupation

How is indexing calculated?

The indexing is based on a comparison of the Consumer Price Index (CPI) average for the 12-month period ending September 30 the same period in the previous year. If there is no change in the CPI, or if it drops, there is no indexing. The result of this calculation is applied to pensions on January 1 of each year.

Outlined below are the data used to calculate the 2020 pension increase.

Monthly evolution of the Consumer price index (CPI) from October 2017 to September 2018
Month/Year CPI%
October 2017 130.9
November 2017 131.3
December 2017 130.8
January 2018 131.7
February 2018 132.5
March 2018 132.9
April 2018 133.3
May 2018 133.4
June 2018 133.6
July 2018 134.3
August 2018 134.2
September 2018 133.7
Total 1,592.6
Monthly average 132.7
Monthly evolution of the Consumer price index (CPI) from October 2018 to September 2019
Month/Year CPI%
October 2018 134.1
November 2018 133.5
December 2018 133.4
January 2019 133.6
February 2019 134.5
March 2019 135.4
April 2019 136.0
May 2019 136.6
June 2019 136.3
July 2019 137.0
August 2019 136.8
September 2019 136.2
Total 1,623.4
Monthly average 135.3

The pension increase for 2020 is calculated by subtracting the monthly average for the first period (October 2017 to September 2018) from the monthly average for the second period (October 2018 to September 2019). The amount is divided by the monthly average for the first period and multiplied by 100, as follows:

  • 135.3 - 132.7 = 2.6
  • (2.6 ÷ 132.7) x 100 = 2.0% (indexing rate for 2020)

Will I be notified before my pension becomes indexed?

The Government of Canada Pension Centre will notify you of any changes to your pension before the changes are applied. Also, Canadian Armed Forces (CAF) pensioners receive an annual information bulletin about indexing each January.

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