Prudential reduce monthly annuity payment

horsechestnut

Just got a letter from Prudential saying that as my pension annuity is linked to the Retail Price Index which has fallen, then my monthly pension will go down in line with the RPI starting in September. :eek:

I wonder if the State Pension will do the same?

MikeJones_2

horsechestnut wrote: »

Just got a letter from Prudential saying that as my pension annuity is linked to the Retail Price Index which has fallen, then my monthly pension will go down in line with the RPI starting in September.

In May 2009 Standard Life wrote to 25,000 customers with inflation-linked annuities. The letter explained that pension payments may not increase and may even decrease if deflation persists.

See: Standard Life contacts 25,000 annuity customers impacted by deflation (Citywire)

horsechestnut wrote: »

I wonder if the State Pension will do the same?

No it won't. There's a commitment (not a guarantee) made by the then Chancellor in his pre budget report in 2001 to increase the Basic State Pension by the higher of RPI or 2.5% p.a.

September's RPI is used and applied to pensions the following April. On 6th April 2009 for example the Basic State Pension rose by 5% because that's what RPI was in September 2008.

Reassured?

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.

Newly_retired

Haven't we also been promised a % increase in State Pension next April too? As far as I can remember it is 2.5%. Can anyone confirm this?

horsechestnut

Thanks for the reply MikeJones.
As for the State Pension increase; I'll believe it when I have it in my Bank Account!!!