Public service pensions to increase by 0.5% in line with CPI

Public service pensions will be increased by a minimum of 0.5 per cent from 12 April 2021, in line with the annual increase from the Consumer Prices Index (CPI) up to September 2020.

Legislation governing public service pensions means that they are required to be increased annually by the same percentage as the state earnings related pension and state second pension.

The increase was confirmed by Chief Secretary to the Treasury, Stephen Barclay, who added that the exception was public service pensions which had been in payment for less than 12 months, which would see a pro-rata increase.

Meanwhile, among career average public service pension schemes introduced in 2014 and 2015, active members of the armed forces and fire service pensions will receive increases of 2.4 per cent, teachers pensions will rise by 2.1 per cent, NHS pensions by 2 per cent, police pensions by 1.75 per cent and judicial, local government pension scheme and civil service pensions by 0.5 per cent.

These pensions are revalued annually in relation to either prices or earnings, depending on the terms specified in their scheme regulations, as is specified in the Public Service Pensions Act 2013.

Those which relied on a measure of prices used the figure of 0.5 per cent, while those which relied on a measure of earnings used the figure of 2.4 per cent.

Barclay stated: “Revaluation is one part of the amount of pension that members earn in a year and needs to be considered in conjunction with the amount of in-year accrual. Typically, schemes with lower revaluation will have faster accrual and therefore members will earn more pension per year.”

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