An OMERS pension does not necessarily stay at the same dollar amount throughout retirement. Inflation protection can increase pension payments each January, but the rules now depend partly on when you earned the pension benefit. The OMERS pension increase for 2026 is 2.00%, effective January 1, 2026. Benefits earned before January 1, 2023 receive full inflation protection up to a 6% annual maximum. Benefits earned from January 1, 2023 onward are subject to Shared Risk Indexing, which makes their future inflation protection conditional on the plan’s financial health.
How OMERS Calculates the Annual Pension Increase
OMERS bases its annual inflation adjustment on Canada’s Consumer Price Index (CPI). Rather than using the inflation rate for a single month, it compares the average CPI for the 12-month period ending in October with the average for the corresponding 12 months one year earlier.
For example, the calculation for the 2026 adjustment compared the 12-month average CPI ending in October 2025 with the corresponding average ending in October 2024. The resulting increase was 2.00%. OMERS 2026 inflation adjustment
This averaging method can produce a figure different from the inflation percentage you hear in monthly news reports. It smooths changes across an entire year instead of comparing one month’s CPI with the same month a year earlier.
Indexing happens after the underlying pension has been determined. Your initial benefit comes from the separate OMERS pension calculation, which uses factors such as credited service and best-five earnings.
The 6% Maximum for OMERS Benefits Earned Before 2023
The portion of your OMERS pension earned before January 1, 2023 receives full inflation protection, subject to a maximum increase of 6% in a year. An inflation adjustment above 6% is not necessarily lost. The excess can be carried forward and applied in a later year when the calculated CPI increase falls below 6%, provided the pension remains in pay.
The 2023 adjustment shows how this works. OMERS calculated inflation of 6.51% but applied the 6% annual maximum. The remaining 0.51% was carried forward. In 2024, the regular inflation adjustment was 4.42%, and eligible pensions affected by the previous cap received the additional 0.51%, producing a 4.93% increase.
The carry-forward rule matters because the 6% figure is an annual limit rather than a rule permanently discarding every CPI increase above that level.
How Shared Risk Indexing Changes OMERS Indexing After 2022
Benefits earned on or after January 1, 2023 fall under Shared Risk Indexing (SRI). Under SRI, the OMERS Sponsors Corporation Board can adjust the level of future inflation protection for this portion of a pension after assessing the financial health of the plan. OMERS Shared Risk Indexing rules
A member with service both before and after January 1, 2023 can therefore have two portions of the same pension subject to different indexing rules. The pre-2023 portion retains guaranteed full inflation protection up to the applicable 6% maximum, while the post-2022 portion has conditional indexing.
SRI does not allow an existing pension payment to be reduced because of negative inflation. Its effect is on the amount of future indexing granted to benefits earned after 2022.
For 2026, SRI did not reduce the adjustment. The 2.00% increase represents 100% of the calculated inflation adjustment and applies to pensions in payment, subject to the first-increase proration rules.
Your First OMERS Pension Increase May Be Smaller
Someone who has just retired may not receive the full published percentage on the first January after retirement. OMERS prorates the first inflation adjustment according to the month the pension began. OMERS inflation protection and proration rules
For example, a pension that started in February 2025 receives a 1.67% increase on January 1, 2026 rather than the full 2.00%. The proration factor is 0.8333 because the pension was in payment for 10 months after the first payment in February. Assuming it remains in pay, the pension becomes eligible for the full applicable annual adjustment beginning with the next increase.
A pension beginning in December 2025 receives no increase on January 1, 2026. Its first potential inflation increase is January 1, 2027.
This timing rule can make the first increase look unexpectedly low even when OMERS has granted full inflation protection for the year. The applicable increase changes the amount arriving on the regular OMERS pension payment dates rather than creating a separate COLA payment.
Which OMERS Benefits Receive Inflation Protection?
Inflation protection applies to OMERS retirement, disability and survivor pensions in pay. For a retired member receiving both a lifetime pension and an OMERS bridge benefit before age 65, the annual pension statement provides the member-specific amounts affected by the adjustment.
Retired members and survivors receive an annual pension statement in December showing their upcoming increase. Statements are available through myOMERS and are mailed to members who receive pension information by mail.
For retirement planning, we would avoid assuming that today’s inflation adjustment will continue indefinitely. The CPI calculation changes annually, and post-2022 benefits have the additional SRI condition. Your actual pension record is therefore more useful than projecting one year’s percentage across an entire retirement. The broader OMERS pension structure also matters when estimating how much of your retirement income will come from the plan.
Questions About OMERS Pension Indexing
Can your OMERS pension decrease if inflation is negative?
Your pension payment will not decrease because CPI is negative. A negative inflation result does not produce a corresponding reduction in the pension already being paid.
Is the OMERS inflation increase the same as the CPP increase?
The calculation methods are similar because both use changes in 12-month average CPI figures. However, OMERS rounds its result to two decimal places, whereas CPP rounds to one decimal place, so their published increases can differ.
Does OMERS announce the next increase before January?
The annual adjustment can be calculated after the October CPI information becomes available. Retired members and survivors receive their annual pension statements in December showing the increase that will apply in January.
Does the OMERS increase change how much you contributed while working?
Indexing affects qualifying pensions in payment rather than the contribution percentages deducted from active members’ earnings. Current payroll deductions are governed by the separate OMERS contribution rates.
