Anyone know what the local government pension increase is?

joemardo1

Hi there,

I wonder does anyone know what the 09 increase for retired members of the local government pension scheme (england) is going to be?

thanks
Joe

CAE

5% if you have been in receipt of pension for the last year.

joemardo1

wow nice, thanks for reply.

but will probably be next to nothing in 2010,

awell 5% is great for this year think thats the hightest I ever got.

regards
Joe

wonderman

joemardo1 wrote: »

wow nice, thanks for reply.

but will probably be next to nothing in 2010,

awell 5% is great for this year think thats the hightest I ever got.

regards
Joe

I would batten down the hatches and not expect too many increases in the future; Gordon's cupboard is bare having bailed a few banks out.

Liquorice_Twirls

wonderman wrote: »

I would batten down the hatches and not expect too many increases in the future; Gordon's cupboard is bare having bailed a few banks out.

Surely they would have to make a wholesale change to the Local Govt Pension Regulations to do this? Someone doesn't just decide how much raise should be paid, it is set out in legislation and is the RPI in the previous September.

I can see no way that pensions that are already in payment would be affected in the way suggested, it would be contrary to the arrangements made at the point the person retired.

To all you LGPS pensioners - enjoy!

wonderman

Liquorice_Twirls wrote: »

Surely they would have to make a wholesale change to the Local Govt Pension Regulations to do this? Someone doesn't just decide how much raise should be paid, it is set out in legislation and is the RPI in the previous September.

I can see no way that pensions that are already in payment would be affected in the way suggested, it would be contrary to the arrangements made at the point the person retired.

To all you LGPS pensioners - enjoy!

Pension increases that are in any way discretionary will be easy targets. If they are linked to RPI then you are right.

Oblivion

Must have missed this thread first time around. I've just seen the official Pensions Increase (Review) Order 2009 made on the 16th March confirming our 5% pension increase.

Although we all knew it was coming, due to the high RPI in September, it's still very refreshing to see it in print. I shall look forward to that nice present in my April pension slip. :T

One thing I've still not been able to establish, and my former local authority's pension section couldn't answer it either, is what happens next year if the RPI is negative in September 2009. Will our pensions go down, or will they just be frozen at the level they already are?

Dave.

MikeJones_2

Hi Oblivion,

Oblivion wrote: »

One thing I've still not been able to establish, and my former local authority's pension section couldn't answer it either, is what happens next year if the RPI is negative in September 2009. Will our pensions go down, or will they just be frozen at the level they already are?

Good question and one I've been trying to get a definitive technical answer to recently.

There have been a couple of interesting articles on this subject:

In Professional Pensions there was an interesting comment about the effect of deflation on preserved pensions:

- Deflation could add £1bn in extra liabilities (Professional Pensions)

Within the article, Aon Consulting actuary and consultant Sarah Abraham said: "Although increases to deferred members allow negative inflation to offset positive inflation, increases to pensions in payment do not have this flexibility. We believe that to review the rules at this time is both a rational and proportionate response."

Another:

- The effects of negative inflation (Yorkshire Evening Post)

This article says, 'Deflation is not expected to effect the level of income that people with occupational pension schemes receive.

The majority of work-based pension schemes have a floor of 0% on their index-linking, meaning that people's incomes cannot fall even if RPI becomes negative.

Trustees at some schemes are thought to have the discretion to reduce pensions in line with negative RPI, but they are not expected to exercise this.

Tom McPhail, head of Pensions Research at Hargreaves Lansdown, said: "We expect the majority of trustees, even if they could (reduce pensions], not to. It would upset a lot of people, but wouldn't actually save a lot of money."'

What's important is to distinguish between what happens to pensions in payment as opposed to what happens to preserved pensions.

I'm at a meeting of the Specialist Pensions Forum on Thursday and have posted the question for the Agenda. I'll let you know what I can source as a definitive answer.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

Oblivion

MikeJones wrote: »

Hi Oblivion,



Good question and one I've been trying to get a definitive technical answer to recently.

I'm at a meeting of the Specialist Pensions Forum on Thursday and have posted the question for the Agenda. I'll let you know what I can source as a definitive answer.

Mike

Thanks for the input Mike. Look forward to hearing further after your meeting.

Dave.

AlienT

Liquorice_Twirls wrote: »

Surely they would have to make a wholesale change to the Local Govt Pension Regulations to do this? Someone doesn't just decide how much raise should be paid, it is set out in legislation and is the RPI in the previous September.

I can see no way that pensions that are already in payment would be affected in the way suggested, it would be contrary to the arrangements made at the point the person retired.

To all you LGPS pensioners - enjoy!

In the recent budget someone just has decided the level of increase to be paid to public sector pensioners (moving the scheme away from RPI to CPI). If the Tories can do this to our "sacrosanct" RPI link what might they try next?

mjm3346

AlienT wrote: »

In the recent budget someone just has decided the level of increase to be paid to public sector pensioners (moving the scheme away from RPI to CPI). If the Tories can do this to our "sacrosanct" RPI link what might they try next?

Over the last 10 years an increase under RPI would be worth over 30% and by CPI under 20%. The "lost increase" over 10 years on a £5,000 pension would be about £500 a year.

The difference would be even bigger without last years exceptional figures where, because of the low interest rates, RPI was minus 1.4% while CPI was plus 1.1% (one of only 3 times in 20 years CPI has been the higher figure of the two)