Pensions Increase

All public service pensions (of which the LGPS is one) are increased each year to reflect the rises in the cost of living. This is sometimes called inflation proofing or index linking.

The LGPS offers full index linking to pension benefits i.e. there is no upper limit or capping on the amount by which benefits will be increased in times of high inflation.

Pensions Increase is normally paid to:

Pensioners who are aged 55 or over; or
Pensioners who have retired for the reason of permanent ill health at any age; or
Spouses and dependants of former pensioners

Pensions Increase 2011

Your LGPS pension is increased annually in line with the rise in the Consumer Price Index (CPI), in accordance with the Pensions Increase Act 1971. Although pensions are increased in April, they are based on the rise in the CPI over the 12 months to the previous September. The pensions increase calculation for April 2011 has been based on the increase in CPI during the 12 months preceding September 2010 and has been set at 3.1%.

We will be issuing you with a separate notification of how the pension increase affects your own pension.

For pensions which began before 27th April 2010 this year's increase will be the full 3.10% effective from 11 April 2011. For pensions which began on or after 27th April 2010 the increase will be calculated in accordance with the following table:

From	To	Percentage increase (%)
Pensions commencing before 27th April 2010		3.10%
27th April 2010	26th May 2010	2.84%
27th May 2010	26th June 2010	2.58%
27th June 2010	26th July 2010	2.33%
27th July 2010	26th August 2010	2.07%
27th August 2010	26th September 2010	1.81%
27th September 2010	26th October 2010	1.55%
27th October 2010	26th November 2010	1.29%
27th November 2010	26th December 2010	1.03%
27th December 2010	26th January 2011	0.78%
27th January 2011	26th February 2011	0.52%
27th February 2011	26th March 2011	0.26%

The rates of pensions increase for the last 12 years are:

Date of Increase	Percentage
11 April 2000	1.10%
9 April 2001	3.30%
8 April 2002	1.70%
7 April 2003	1.70%
12 April 2004	2.80%
11 April 2005	3.10%
10 April 2006	2.70%
9 April 2007	3.60%
7 April 2008	3.90%
6 April 2009	5.00%
12 April 2010	0.00%
11 April 2011	3.10%

Pensions Increase and GMP

This is where things get a little complicated. The LGPS is contracted out of the State Second Pension (formerly known as SERPS - the State Earnings Related Pension Scheme). When you reach state pension age you will receive a notice from HM Revenue & Customs giving details of your Guaranteed Minimum Pension (GMP) (this is the amount that is guaranteed to be paid to you by the LGPS had you not been contracted out of the State Second Pension).

Your GMP is already included in the total pension you receive from the Berkshire Pension Fund. From state pension age, therefore, your pensions increase will be paid from 2 sources, HM Revenue & Customs and the Berkshire Pension Fund.

Let us take an example of somebody who retired on 31st March 2006 with a total pension of £1,000. Of that amount let's say that £300 relates to the GMP. The remaining £700 will be increased by 2.7% to £718.90. Add back on the GMP and the total pension payable from the Berkshire Pension Fund is £1,018.90. The remaining pensions increase due on the GMP will be included as part of your State Pension as paid by HM Revenue & Customs.

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