Clarification on crystalising pension/s

kidmugsy

232607 wrote: »

I can't say what figures would have been used to work out index linking during retirement but what we do know is the maximum as stated earlier...Repeated here:-

The inflation protection in retirement breaks down in to 2 sections:-
For pension accrured pre 2002 - based on RPI but a min of 3% and max 5%.
For pension accrured after 2002 - based on CPI but to a max of 3%.

Would these not have been used, meaning that if RPI/CPI was lower at times during retirement it would have the affect of pushing the 82 figure further out due to the DB not rising as quickly as the maximum?

On that basis, at the moment a deferred pension would be earning 3%p.a. on pre-2002 money, and (about) 1%p.a. on post-2002.

The value of the index-linking isn't negligible, but isn't much protection against 1970s-like inflation. It would be useful protection against a 3% p.a. inflation, which would halve the value of a level annuity in 24 years.

232607

kidmugsy wrote: »

On that basis, at the moment a deferred pension would be earning 3%p.a. on pre-2002 money, and (about) 1%p.a. on post-2002.

The value of the index-linking isn't negligible, but isn't much protection against 1970s-like inflation. It would be useful protection against a 3% p.a. inflation, which would halve the value of a level annuity in 24 years.

This is telling me that the 2nd option of using investment returns rather than the annuity route would be the only defence for 1970's-like inflation. IE stock market should be giving high returns in this scenario.
As you say, neither the annuity route nor remaining in the DB will protect against rampent inflation.