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Message to Teachers Considering Retirement

INFLATION PROTECTION ALERT !!!

You have paid for a COLA (cost of living adjustment) for your pension, with the expectation of inflation protection.

Your COLA becomes more important the longer you are retired, as the percentage of your pension attributable to COLA over time increases.

Retired teachers are asking, "Where’s our COLA?" This is your future too. Become informed about the TRAF COLA problem.

RTAM is representing the interests of retired teachers. Join retired teachers in their fight for a fair COLA for their future and yours.

BACKGROUND: TEACHERS’ PENSION PLAN

  • A portion of your TRAF contributions (1/6) has been allocated to a separate Pension Adjustment Account (PAA), which finances COLA.

  • Your TRAF COLA, granted annually, is to be the percentage increase in the Consumer Price Index (CPI) for Canada – i.e. a full COLA – unless the granting of a full COLA would result in an unfunded liability (deficit) in the PAA. Then a reduction in the full COLA would occur and TRAF would pay what it could afford to pay.

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    THE REALITY
    For a number of years TRAF has been unable to pay the level of COLA grants it has paid historically. The last year a full COLA was granted was in 1998 (except for 2002).

  • History For the last 7 of 8 years since 1999, even in a period of low inflation, TRAF has paid less than a full COLA.

  • Current The July 1, 2006 COLA grant was 0.64% in relation to a CPI of 2.2% or 29.1% of CPI (a $128.00 COLA for a $20,000 pension).

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  • Result The purchasing power "hole" of retired teachers is deepening. A 1999 pension dollar is now worth approximately 91 cents.

  • Future An average 0.8% COLA annually for the next 20 years has been projected by the TRAF Board actuary. This is in relation to a TRAF inflation assumption of 2.5%. For retirees, a 2007 dollar would be worth 72 cents in 20 years.

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    ARE YOU AWARE THAT:

    •  Manitoba teachers now receive a "bottom-of-the-pack" COLA compared to other teacher pension plans?

    • There have been 20 years of actuarial warnings about the COLA funding problems and 20 years of inaction in fixing the problem?

    • Other provinces have acted to deal with teacher pension issues?

    • The Government is proposing that TRAF’s COLA be capped at a maximum 2/3 of CPI (rationale: comparability with the Civil Service Superannuation Fund), with no commitment regarding improving funding to the PAA?

    • A 2/3 cap is unfair to retired teachers because teachers have paid 60% more than civil servants for a higher COLA (16.6% vs. 10.2% of contributions into their respective indexing accounts)?

    RETIRED TEACHERS ARE DEMANDING FAIRNESS

    • The COLA problem is unfair to retired teachers.

    • The Province should fulfill its obligation as a sponsor of the Plan and commit to making a resolution of the COLA problem a priority.

    • Fair and equitable treatment of retired teachers should be first principles for resolution of the COLA problem.

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