A LAPP pension is partially indexed to protect the value of your money. Over time, inflation wears away the purchasing power of money. Without any inflation protection, your pension would not keep up with the cost of higher prices for goods and services that tomorrow will bring.
At LAPP, your pension is adjusted annually with a Cost-of-Living Adjustment. We call it COLA for short. Each year, your pension will increase at a rate of 60% of the change in the Alberta Consumer Price Index (ACPI). The ACPI measures the average cost of a basket of goods and services purchased by Alberta consumers over 12 months. If the basket costs 2% more this year than it did last year, your pension would increase by 60% of that 2% increase, or by 1.2%.
This annual pension adjustment (indexing) is set out in the current legislation governing LAPP and is a significant factor in understanding how Your Plan has Value. You can read more about inflation protection at Will the Amount of My Pension Change?