Pension Increases

How your pension increases before and after it is in payment

In this article
Deferred Pension Pension in Payment

Deferred Pension

If you have not yet retired, you have a deferred pension.

Your Final Salary Pension is calculated according to the Scheme Rules at the date you left the Scheme.

This pension is revalued on 1st April (the start of the Scheme Year) for every complete year that passes since you left. The percentage increase we apply is published by the government.  It is based on the Consumer Prices Index (CPI), which is a measure of inflation that is calculated every month by the government.

When you come to retire, if you qualify for the Final Salary Pension it is this revalued pension figure that is put into payment.

In this way, your deferred Final Salary Pension is provided with some protection against the cost of rising prices between when you leave the Sheme and when you retire.

Your Money Purchase Pension is not revalued in this way. This is because when you come to retire, if you qualify for the Money Purchase Pension, this pension is calculated from the value of your Money Purchase Account (the value of which changes every month) and your age at the date of retirement.

You can find out more about the two different types of Scheme pension here.

Pension in Payment

Once your pension is in payment an increase will be applied each year on 1st April.

If your pension is increased by the RPI Method and the annual change in RPI has been zero, your increase may be zero.

The rate of increase depends upon when you joined and left the Scheme as follows:

  • If you joined and left the Scheme before 1st October 1994, your pension increase rate is 5%.
  • If you joined the Scheme before 1st October 1994, you were given the choice of 5% increases or RPI Method increases.
  • All pension benefit that was built up from 1st April 2004 is given an RPI Method increase, regardless of when you joined the Scheme.

The RPI Method

The RPI Method is based on the increase in the Retail Prices Index in the year preceding the pension increase, as measured from January to January.

e.g. the increase applied on 1st April 2024 is based on the change in the RPI from January 2023 to January 2024.

The annual RPI increase may be any value from 0% to 9%, as follows.

  • If the increase in RPI in the year is 0%, there is no pension increase.
  • If the increase in RPI in the year is no more than 6%, the rate of pension increase will be equal to the RPI increase.
  • If the increase in RPI in the year is more than 6%, the rate of pension increase will be 6% plus half the RPI increase above 6%.
  • If the increase in RPI in the year is more than 12%, the rate of pension increase will be capped at 9%.

Part-year Increases

If your pension started after 1st April, the first increase you will receive on the following 1st April is in proportion to the number of complete months you have been retired.

e.g. if you retire on 21st June, the increase applied on the following 1st April is nine twelfths (9/12) of the increase rate. 

The exception to this rule is if you are the dependant of a pensioner who died. In this case it is the date that the deceased’s pension started that determines whether or not you receive a proportional increase in the April after their death.