AESP urges ESPS sponsors to refrain from capping pension increases

The Association of Electricity Supply Pensioners (AESP) has called on sponsoring employers of the Electricity Supply Pension Scheme (ESPS) to refrain from capping pension increases in April next year at 5 per cent.

In a statement, the association noted that, despite ‘first impressions’, the scheme was not fully inflation-linked and the sponsors would be able to cap pension increases at 5 per cent next year under the scheme rules.

It said that the increase would be at a time when the RPI inflation measure used to value the scheme’s pensions would likely to be running at twice the current rate, while ESPS pensioners will be dealing with the cost-of-living crisis.

A spokesperson for the AESP stated: “We recognise that there are many pension schemes in other industrial sectors whose members will be lucky to get 5 per cent next year, let alone anything above that.

“But the electricity companies in charge of the ESPS are highly profitable, with strong cash flows and a well-developed sense of corporate responsibility.

“We believe that they will want to do the right thing for their pensioner members, and that the trustees of the scheme and the pensioners themselves will be expecting them to do so.”

The ESPS is an industry-wide legacy defined benefit scheme with more than 100,000 members, 26 participating groups and nearly £50bn of assets.

Rule 26 of the scheme’s rules allows sponsoring employers to choose and apply a figure for the increase if the calculated pension increase is more than 5 per cent, as long as the chosen increase is not less than 5 per cent.

Pensions Age has contacted several of the scheme’s sponsoring employers for comment, with National Grid Electricity Transmission stating it was unable to comment.

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