1. Inflation protection can help protect the buying power of your pension in retirement.

2. Three Factors Affect Annual Increase2
Three Factors Affect Annual Increase
1 Base inflation adjustment 2 Plan’s funding status 3 When you worked & earned pension credit
How much inflation protection you get depends on three key factors:
The base inflation adjustment, which reflects the annual increase in the cost of living.
The plan’s funding status. This determines how much of the base inflation adjustment the pension plan can afford to pay.
When you worked and earned pension credit.
Let’s look at each of these factors in more detail.

3. 1 Base Inflation Adjustment
T H R E E F A C T O R S 3
1 Base Inflation Adjustment
Reflects annual increase in cost of living
Increase measured by changes in Consumer Price Index (CPI)
To calculate base adjustment, we compare average monthly CPI for 12 months ending in September to 12-month average a year earlier
This effectively averages monthly CPI increases
The base inflation adjustment reflects the annual increase in the cost of living.
The cost of living is measured by changes in the Consumer Price Index, or CPI for short.
CPI is the most widely used indicator of price changes in Canada.
It tracks the cost of a fixed basket of goods and services purchased regularly by consumers. Food, clothing, and transportation are among the many items in the basket.
To calculate the base inflation adjustment, we compare the average monthly CPI for the 12 months ending in September to the 12-month average a year earlier.
This effectively averages monthly cost-of-living increases.

4. T H R E E F A C T O R S 4
2 Plan’s Funding Status
Determines how much of the base inflation adjustment the pension plan can afford to pay
A funding valuation may project shortfall of assets to meet the projected pension costs
To address shortfall, OTF and government could provide less than 100% inflation protection for pension credit earned after 2009
Inflation protection levels can be partially or fully restored when funding status improves
Next, we look at the plan’s funding status.
A funding valuation can show three main outcomes: a shortfall of assets, a surplus of assets or the right amount of assets to meet future pension costs.
The plan’s funding status determines how much of the base inflation adjustment the pension plan can afford to pay.
To address a shortfall, the plan sponsors could provide less than 100% inflation protection for pension credit earned after 2009.
When the plan’s funding status improves, inflation protection levels may be partially or fully restored.
Using inflation protection this way helps to keep the pension plan in balance. That’s good news for everyone.

5. 3 When You Worked & Earned Pension Credit
T H R E E F A C T O R S 5
3 When You Worked & Earned Pension Credit
To determine your annual pension increase, we look at three periods of pension credit (actual teaching time):
1. Before 2010
2. During
3. After 2013
Each period has a different level of inflation protection
Once we know the inflation adjustment and the plan’s funding status, we can calculate your annual pension increase.
To do that, we look at when you taught and earned pension credit.
There are three periods of pension credit that come into play. Each has a different level of inflation protection. The three periods are:
• Pension credit earned before 2010
• Pension credit earned during
• Pension credit earned after 2013
You could be affected by one or more of these periods, depending on when you worked.
For example, you will be affected by all three periods of credit if you taught on a full-time contract since 2006.
Let’s look at the three periods in more detail.

6. Pension Credit Earned Before 2010
T H R E E P E R I O D S O F P E N S I O N C R E D I T 6
Pension Credit Earned Before 2010
100% inflation protection
What does this mean when you retire?
This portion of your pension keeps pace with annual CPI increases
Pension credit earned before 2010 is 100% protected against inflation.
Any portion of your pension earned before 2010 will keep pace with annual increases in the Consumer Price index. This protection applies throughout your retirement.

7. Pension Credit Earned During 2010-2013
T H R E E P E R I O D S O F P E N S I O N C R E D I T 7
Pension Credit Earned During
50% to 100% inflation protection
What does this mean when you retire?
This portion of your pension receives at least 50% and up to 100% of annual CPI increase
The next level of inflation protection applies to any pension credit you earned during 2010, 2011, 2012 and 2013.
This portion of your pension will receive at least 50% and up to 100% of the annual increase in the CPI.
Once again, the percentage is largely dependent on the plan’s funding status. In good times, the plan can afford to pay a higher level of inflation protection.

8. Pension Credit Earned After 2013
T H R E E P E R I O D S O F P E N S I O N C R E D I T 8
Pension Credit Earned After 2013
0% to 100% inflation protection
What does this mean when you retire?
This portion of your pension receives from zero to 100% of annual CPI increase
The third level of inflation protection applies to the portion of your pension earned after 2013.
The annual increase for this portion of your pension could range from zero to 100% of the annual CPI increase.

9. What it means when you retire
T H R E E P E R I O D S O F P E N S I O N C R E D I T 9
Summary
When you earned
your pension credit
Inflation
protection level
What it means when you retire
Earned before 2010
100%
This portion of your pension will keep pace with annual increases in the Consumer Price Index (CPI).
Earned during
50% to 100%
This portion of your pension will receive at least 50% and up to 100% of the annual increase in the CPI.
Earned after 2013
0% to 100%
This portion of your pension will receive from zero to 100% of the annual increase in the CPI.
Let’s recap the three periods of credit that affect your annual pension increase in retirement.
Pension credit earned before 2010 is 100% protected against inflation.
Pension credit earned during 2010 to 2013 is conditionally protected against inflation. This portion of your pension will receive at least 50% and up to 100% of the annual increase in the cost of living.
Lastly, pension credit earned after 2013 is fully conditional on the plan’s funding status. This portion of your pension will receive from zero to 100% of the annual increase in the cost of living.

10. E X A M P L E S 10
Assumptions
Louise, Jason & Chloe are at different stages of their careers
Each will retire with a $50,000 annual pension after 25 years of full-time teaching
The plan determines the annual base inflation adjustment is 2%
OTF and government set the level of inflation protection for the year at:
90% for pension credit earned during to 2013, and
90% for pension credit earned after 2013
Let’s see how the plan’s inflation provision affects three fictitious teachers.
Louise, Jason and Chloe are at different stages of their careers.
Louise is a late-career teacher.
Jason is a mid-career teacher and....
Chloe is an early-career teacher.
For simplicity, we’ll assume each retires with a $50,000 annual pension after 25 years of full-time teaching.
To calculate each member’s annual increase, the pension plan first determines the inflation adjustment. In this example, we assume the inflation rate or adjustment is 2%.

11. E X A M P L E S 11
Assumptions
Based on 2% inflation, annual pension increase will include:
2% for pension credit earned before 2010 (100% of 2%);
1.8% for pension credit earned during 2010 to (90% of 2%); and
1.8% for pension credit earned after 2013 (90% of 2%).
Let’s look at how this affects Louise, Jason and Chloe.
Next, OTF and the government set the annual level of inflation protection based on the plan’s funding status.
In this example, we assume the pension plan does not have enough funds to provide 100% inflation protection for all pension credit.
To keep the plan balanced, OTF and the government decide to provide:
• 90% of the inflation rate for pension credit earned during 2010 to and
• 90% of the inflation rate for pension credit earned after 2013.
Here’s how their decision would affect Louise, Jason, and Chloe.

12. Louise: Late-Career Teacher
E X A M P L E S 12
Louise: Late-Career Teacher
The big picture:
75% of Louise’s pension will be fully protected against inflation throughout her retirement
Remaining 25% will be conditionally protected
When Louise earned her pension credit
Inflation level
How we calculate the increase:
Pension X inflation level X % of credit
Her pension increase
75% earned before 2010
100% of CPI = 2.0%
$50,000 X 2.0% X 75%
$ 750
15% earned during
Set at 90% of CPI = 1.8%
$50,000 X 1.8% X 15%
$ 135
10% earned after 2013
$50,000 X 1.8% X 10%
$ 90
Total Pension Increase $ 975
Louise, our late-career teacher, is affected by all three levels of inflation protection.
She earned 75% of her pension credit before All of that pension credit is 100% protected against inflation.
The remaining 25% of her pension was earned after That 25% is conditionally protected against inflation.
Fast-forward in time. Louse is now retired. Look at the chart to see how we calculate her annual pension increase.
First, we multiply Louise’s annual pension of $50,000 X the 2% inflation adjustment X 75%. 75% represents the percentage of her pension earned before 2010.
Next, we calculate the increase affecting the 15% of her pension earned during 2010 to We multiply her $50,000 pension X 1.8% x 15%. The 1.8% represents 90% of the inflation rate. We pretty much repeat the same process for credit earned after 2013.
We then total all three lines to get her annual increase.

13. Jason: Mid-Career Teacher
E X A M P L E S 13
Jason: Mid-Career Teacher
The big picture:
45% of Jason’s pension will be fully protected against inflation throughout his retirement
Remaining 55% will be conditionally protected
When Jason earned his pension credit
Inflation level
How we calculate the increase:
Pension X inflation level X % of credit
His pension
increase
45% earned before 2010
100% of CPI = 2.0%
$50,000 X 2.0% X 45%
$ 450
15% earned during
Set at 90% of CPI = 1.8%
$50,000 X 1.8% X 15%
$ 135
40% earned after 2013
$50,000 X 1.8% X 40%
$ 360
Total Pension Increase $ 945
Next up is Jason, our mid-career teacher.
45% of Jason’s pension was earned before This portion is fully protected against inflation.
The remaining 55% of his pension is conditionally protected against inflation.
Let’s age Jason a little. He’s now enjoying a comfortable retirement.
To calculate his pension increase, we multiply Jason’s annual pension of $50,000 X the inflation rate of 2% X 45%. The 45% represents the percentage of his pension earned before 2010.
Next, we calculate the increase for his other two periods of pension credit and add all the numbers together.

14. Chloe: Early-Career Teacher
E X A M P L E S 14
Chloe: Early-Career Teacher
The big picture:
100% of Chloe’s pension will be conditionally protected against inflation throughout her retirement
When Chloe earned her pension credit
Inflation level
How we calculate the increase:
Pension X inflation level X % of credit
Her pension increase
0% earned before 2010
N/A
12% earned during
Set at 90% of CPI = 1.8%
$50,000 X 1.8% X 12%
$ 108
88% earned after 2013
$50,000 X 1.8% X 88%
$ 792
Total Pension Increase $ 900
Chloe’s situation is a little different.
She earned all of her pension credit after 2009.
That means all of her pension will be conditionally protected against inflation when she retires.
Chloe’s also going to time travel to retirement.
To calculate her increase, we multiply her $50,000 annual pension X the inflation level of 1.8% X the percentage of pension credit she earned during 2010 to 2013.
We repeat this process for the portion of her pension earned after 2013 and tally all the numbers.
Note that the inflation level was set at 90% for both periods of pension credit.
Remember...the inflation level can range from 50% to 100% of the CPI increase for credit earned during 2010 to and zero to 100% for credit earned after 2013.

15. W R A P U P 15
Top 4 Things to Remember
1 Annual inflation increases are determined each year after you retire 2 You don’t bank or accumulate a particular level of inflation protection while you work
I’ve provided a lot of information on inflation protection. It’s not an easy topic to grasp…so let me recap four key points:
Your annual inflation increase is determined each year after you retire.
You don’t bank or accumulate a particular level of information protection while you work.

16. W R A P U P 16
Top 4 Things to Remember
3 Throughout your retirement, you will receive:
100% inflation protection for any pension credit earned before 2010, and
a variable amount of inflation protection for any pension credit earned after The amount will vary each year, depending on the plan’s ability to pay for it.
4 Annual inflation increases are added to your existing pension amount – this new amount becomes your new lifetime pension
3. Throughout your retirement, you will receive:
100% inflation protection for any pension credit you earned before 2010; and
a variable amount of inflation protection for any pension credit earned after That amount will vary each year, depending on the plan’s funding status.
4. Your annual inflation increases are added to your existing pension amount. This new amount becomes your new lifetime pension.

17. I’m happy to answer any questions you may have.
You can also consult the pension plan’s website for more information.
MORE INFORMATION
• Visit the pension plan’s website at
• Talk to your affiliate pension representative