Occupational pensions and inflation

I have half my H's pension since he died and if I read all the small print could maybe find out.
I know that in April I got 3.1% the same as the state pension but I also recall that one year I got no increase.
I think it is inflation linked and not the higher one.

My understanding is that final salary occupational pensions (the type that were 'contracted out') usually increase in line with inflation, but there is no triple lock. The Teachers' pension is linked to the CPI (Consumer Price Index) and rose by 3.1% last year, for instance. That seems uncomplicated, but I may very well be missing something significant .

Unfortunately (but understandably), most pensions are significantly lower than most salaries, so the increases are also lower (ie 3.1% of a small amount is an even smaller amount) so whilst rises may seem comparable with wage rises, they make a much less significant difference to the lifestyle of the pensioner.

Similarly, talk of the 'unfairness' of state pensioners getting larger than average percentage increases is based on weaselly expressions of the calculations IMO - it would mean more if they were expressed in real terms - ie 'state pensions will rise by £X' a week. Occupational pension calculations and increases will vary, and depend on the terms and conditions illustrated at the start, so whereas increases may be small, they will be in line with what people signed up to and the rate of their contributions.

Callistemon21

Some private pensions have GMP applied which means any rise they give (if any at all) is only on part of the pension and how they work this out remains a mystery to anyone but an accountant pensions adviser.

aint this the truth!

I am no dimwit but could not get to grips with contracted out and that my widows part of husbands contracted out is and was, £79 and wil always be £79 pm. A lot of people in the 80s were sucked into contracted out schemes by insurance companies which then changed hands several times

Accountant or pensions adviser.

Some private pensions have GMP applied which means any rise they give (if any at all) is only on part of the pension and how they work this out remains a mystery to anyone but an accountant pensions adviser.

All public sector schemes were contracted out. I’m an NHS pensioner, this is how it applies to us (from NHS pensions site).

‘Q. How is the amount of Pensions Increase set?
A. Pensions are reviewed annually and are increased, as appropriate, to keep pace with rises in the cost of living by the application of Pensions Increase. Increases are paid in April and reflect any rise in the rate of Consumer Price Index inflation in the 12 month period up to the end of September in the previous year.
The measure by which all public sector pensions are increased is determined by the Government. All pensioners will receive notification of the rate applied within the Annual Pensioners Newsletter. If the cost of living has gone down your pension will not be reduced; it will continue to be paid at the same rate.’

So no, the triple lock doesn’t apply to the NHS scheme as I understand it. Your best bet is to query with your own pension scheme though.

Sorry StarDreamer I'm rubbish at pensions advice but someone will be along in a bit who knows more I expect.

Moi aussi

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