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  • How will your pension increase in retirement?

How will your pension increase in retirement?

The pension increase applicable from 8 April 2019 has been confirmed as 2.4%.

You will usually receive this increase if:

  • you are receiving a pension and you are over 55
  • you retired because of ill-health, or
  • you receive a spouse's, partner's or child's pension.

If you retired part way through the year you won't get the full increase straightaway, please see the FAQ's below for more information.

Please note that if you are in receipt of your pension, your April payment will be a combination of two different annual rates. As the new pensions increase applies from the 8th April, only your pension from the 8th of April will have the new rate applied. This means that you will see the full increase of 2.4% in your May payment.

 

Pension Increase FAQs

What is pensions increase?

 I have been receiving my pension for over a year, why have I not received the full increase in April?

I have been receiving my pension for less than 12 months, why haven't I received the full increase?

Does the West Midlands Pension Fund decide the amount of the increase to my pension each year?

How is the Consumer Price Index (CPI) calculated?

 I am under age 55, why hasn't my pension increased?

How is pension increase applied to my pension?

How is pension increase paid on my Guaranteed Minimum Pension (GMP)?

What is a Guaranteed Minimum Pension (GMP)?

Will my state pension be increased?

 

Q: What is pensions increase?

A: Public service pensions are increased under the provisions of the Pensions (Increase) Act 1971 and Section 59 of the Social Security Pensions Act 1975.

Pensions paid under the Local Government Pension Scheme (LGPS) are increased each April, in line with inflation at the previous 30 September, so that they keep pace with the cost of living. Increases are based on the Consumer Price Index (CPI)

 

Q: I have been receiving my pension for over a year, why have I not received the full increase in April?

A: If you are in receipt of your pension, your April payment will be a combination of two different annual rates.

As the new pensions increase applies from the 8th April, only your pension from the 8th of April will have the new rate applied. This means that you will see the full increase in your May payment, providing that you don't have a Guaranteed Minimum Pension (GMP). 

 If you reached state pension age before 6 April 2016, your pension increase is calculated on your annual pension payment less any Guaranteed Minimum Pension (GMP) amount notified to you by Her Majesty's Revenue and Customs (HMRC). Please note that HMRC may refer to the GMP as a Contracted Out Deduction (COD) in any correspondence to you.                       

            

Q: I have been receiving my pension for less than 12 months, why haven't I received the full increase?

A: If your LGPS pension began on or before 25 April 2018 your pension will attract the full 2.4% increase as it has been in payment for a full year. If your pension began after this date a pro rata increase will apply.

 

Q: Does the West Midlands Pension Fund decide the amount of the increase to my pension each year?

A: No, the increase is set under the Pension (Increase) Act 1971 by HM Treasury. It is increased by the change in the Consumer Prices Index (CPI) in the 12 months ending with the previous September. Further information from HM Treasury can be found at www.gov.uk

 

Q: How is the Consumer Price Index (CPI) calculated?

A: The average price increase of a basket of goods and services are collected from various retailing outlets and an overall percentage increase or decrease is calculated.

 

Q: I am under age 55, why hasn't my pension increased?

A: If you are under the age of 55 and in receipt of your pension, it will only increase if you retired on the grounds of ill health, or if your deferred pension was brought into payment early because of ill health and you are permanently incapacitated from engaging in any regular full-time employment. At the age of 55, your pension will increase to the level it would have been had it been increased every year since your date of retirement.

 

Q: How is pension increase applied to my pension?

A: If you reached state pension age before 6 April 2016, your pension increase is calculated on your annual pension payment less any Guaranteed Minimum Pension (GMP) amount notified to you by Her Majesty's Revenue and Customs (HMRC). Please note that HMRC may refer to the GMP as a Contracted Out Deduction (COD) in any correspondence to you.

 

Q: How is pension increase paid on my Guaranteed Minimum Pension (GMP)?

A: West Midlands Pension Fund is responsible for paying up to 3% increase on the GMP element of your pension between 6 April 1988 and 5 April 1997, with your Local Government Pension.

The Government is responsible for paying the full increase on the GMP element up to 5 April 1988, and any amount outstanding above the 3% paid by West Midlands Pension Fund for the period 6 April 1988 to 5 April 1997, with your state pension.

This year the increase is 2.4% (within the 3% threshold) so the full increase on the GMP element between 6 April 1988 and 5 April 1997 will be paid by the West Midlands Pension Fund with your Local Government pension. The Government will pay the increase on the GMP element up to 5 April 1988 with your State pension.

 

Q: What is a Guaranteed Minimum Pension (GMP)?

A: You may have a GMP if you reached State pension age before 6 April 2016 and you paid into the LGPS between 6 April 1978 and 5 April 1997. The Local Government Pension Scheme (LGPS) was contracted out of State Earnings Related Pension Scheme (SERPS). This means that if you paid in to the LGPS between 6 April 1978 and 5 April 1997 the LGPS must pay you a GMP based on the state entitlement you would have earned if you were in SERPS at the time. In most cases your LGPS pension is higher than your GMP. With effect from 6 April 1997, GMPs no longer accrued. The GMP is paid as part of your Local Government pension, not in addition.

 

Q: Will my state pension be increased?

A:For any information regarding your state pension you should either contact your local Department for Work and Pensions office.

 
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