CAAT uses an “averaging” methodology to calculate the inflation protection rate every year. The formula is based on the Consumer Price Index (CPI) which is a widely-used measure of inflation in Canada. The CPI is calculated and reported monthly, but CAAT’s inflation protection rate is calculated annually, and applied to pensions (including survivor and deferred pensions) in the following year.

The calculation for next year’s rate compares the average CPI for the 12 months ending in September of the previous year to the average CPI for the same period of the current year. It then calculates the percentage change in the two rates and multiplies that rate by 75%.

Calculating the 2024 rate:

1. Previous year: average CPI from October 2021 to September 2022 = 148.8
2. Current year: average CPI from October 2022 to September 2023 = 155.9
3. Percentage change in the two rates: 155.9 / 148.8 – 1 = 4.77151%
4. Multiplied by 75%: 4.77151% x 75% = 3.58% (rounded to 2 decimal places)

The maximum increase in a year is 8%. If the calculated rate were higher than 8%, the balance would be carried forward and applied in the following year. If there were no increase in the CPI of a given year, there would be no increase to pensions in the following year.