Cost-of-living adjustments
January 2017
Bell Canada Pension Plan (the “Plan”) Indexation
The Plan provides for pension indexing each January 1 to partially compensate for cost-of-living increases. This formula takes into account the retiree’s age on January 1 and the increase in the Consumer Price Index (CPI) over a 12-month period running from November 1 of one year to October 31 of the next.
How it works
Under age 65 = The increase in the CPI (rounded to the nearest whole number), up to a maximum of 2%
Age 65 and older = The greater of:
- 100% of the increase in the CPI (rounded to the nearest whole number), up to a maximum of 2% or
- 60% of the increase in the CPI (rounded to the nearest 2 decimal points), up to a maximum of 4%
In the year of retirement, the indexation rate applicable is prorated based on the number of months since the retirement date.
2017 Pension Indexation
As reported by Statistics Canada for the month of October each year: CPI for October 2016 = 129.1 (A)
CPI for October 2015 = 127.2 (B)
Ø Increase in the CPI over the 12-month period = [(A) / (B) ] -1
= [129.1 / 127.2] – 1
= 0.014937 = 1.4937%
Based on the above Plan provisions, here is how the pension indexation is calculated for:
Ø Pensioners under age 65
100% of CPI increase, up to a max of 2% (rounded to the nearest whole number)
= 1.4937% (rounded to the nearest whole number)
= 1%
Ø Pensioners aged 65 and older
The greater between (1) and (2) as follow:
- 100% of CPI increase up to a maximum of 2% (rounded to the nearest whole number) (1)
- 60% of CPI increase up to max of 4% (rounded to the nearest 2 decimal points) (2)
(1) = 100% of 1.4937% up to max of 2% (rounded to the nearest whole number)
= 1.4937% (rounded to the nearest whole number)
= 1%
(2) = 60% of 1.4937% up to max of 4% (rounded to the nearest 2 decimal points)
= 0.89622% (rounded to the nearest 2 decimal points)
= 0.90%
The greater between (1) and (2) is 1%.