The Superannuation and Insurance Liaison Committee (SILC) represents employee and pensioner members of the Civil Service Superannuation Fund (CSSF) Pension Plan (“Plan”). The SILC is actively engaged in the future health of the plan; we discuss potential changes to the plan with the Employer Advisory Committee.

The 2023 CSSB Annual Report highlighted the Cost-of-Living Adjustment (COLA) account (beginning on page 35).

In addition to the core pension benefits provided by the CSSF, the Plan provides for Cost of Living Adjustments (COLA) for retirees. Cost of living adjustments are funded from a separate COLA account. 10.2% of pension contributions by active members of the Plan and pre-funding employers are allocated to the COLA account. The new COLA granted each year is limited to the extent that the COLA account is able to afford it. COLA adjustments have been granted annually but they are not guaranteed.

The cost-of-living benefit payments are limited to the extent that the amount in the separate Indexing Benefits Account is actuarially able to finance one-half of the payment. Legislation limits the maximum annual adjustment to two-thirds of the increase in the Consumer Price Index (CPI) unless the Indexing Benefits Account can pre-fund anticipated adjustments for the next twenty years.

The COLA account’s ability to pay COLA is affected by factors that include CPI, investment returns, and plan demographics. When inflation is low, the COLA account is more likely to be able to pay a greater percentage of the last year’s CPI.

The SILC engages with the Employer Advisory Committee on an ongoing basis on several issues, including improving the funding status of the primary pension fund, COLA and intergenerational equity. Improving funding of the primary pension fund may allow for greater focus to be given to improving cost of living adjustments.