Pension Increases in Deferment and Payment
How is Final Pensionable Salary calculated?
This is the average of the last 12/24 months pensionable salary depending on whether the member joined Pre or Post 1 January 1995. Pensionable salary is restricted to the Individual Salary Cap, which was introduced on 1 December 2013. Further details on Pensionable Salary and the Individual Salary Cap can be found in the Scheme Booklet.
How are Pensions in deferment increased?
Guaranteed Minimum Pension increases at a set percentage for each complete tax year of deferment.
Pension earned prior to 6 April 2009 will be increased based on inflation up to a maximum of 5% per annum.
Pension earned after to 5 April 2009 will be increased based on inflation up to a maximum of 2.5%% per annum.
How is Price Inflation measured?
Inflation is currently assessed using the Retail Price Index for periods up to 2011, and the Consumer Price Index thereafter.
How are Pensions in payment increased?
Increase rates depend on when the member joined the Scheme and when the pension was accrued.
For members who joined before 1 January 1995, the pension in payment, excluding a Bridging Pension (if applicable), will be increased as follows:
1) Pension accrued prior to 6 April 1997 will increase at the rate of 3%
2) Pension accrued after 6 April 1997 and prior to 1 January 2006 will be increased at the rate of 5% or, if less, the annual percentage increase in the Retail Price Index (RPI)
for the 12 months ended not more than 5 months before the review date, but always subject to a minimum of 3%
3) Pension accrued after 31 December 2005 will be increased at the minimum level required by sections 51 and 51ZA of the Pensions Act 1995, as amended or replaced from time to time.
For members who joined after 1 January 1995, the pension in payment, excluding a Bridging Pension (if applicable), will be increased as follows:
1) Pension accrued prior to 6 April 1997 will increase at the rate of 3%, or if less, the annual percentage increase in the RPI for the 12 months ended not more than 5 months before the review date.
2) Pension accrued after 6 April 1997 and prior to 1 January 2006 will be increased at the rate of 5% or, if less, the annual percentage increase in the Retail Price Index (RPI)
for the 12 months ended not more than 5 months before the review date.
3) Pension accrued after 31 December 2005 will be increased at the minimum level required by sections 51 and 51ZA of the Pensions Act 1995, as amended or replaced from time to time.
Are Pension increases paid on the pension prior to commutation?
No, increases are only calculated on the residual pension in payment and increases are pro-rated for the first year of payment.
