Once in payment an increase will be applied to your Hybrid Pension income each year on 1st April.
If 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 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 preceding year, as measured from January to January.
- 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% up to an RPI increase of 12%. This means that the maximum possible increase is 9%, when the increase in RPI is 12% or more.
If your pension started after 1st April, the first increase you will receive at the next increase date is in proportion to the number of complete months you have been retired.
e.g. if you retire on 21st June, the increase applied at 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 which case it is the date that the deceased’s pension started that determines whether or not you receive a proportional increase in the following April.