Civil Service Pension cost of living increases

john19792

Probably a simple question, but I am struggling to find a clear answer on the web.

I am in my 40s and I am thinking about leaving my job in the civil service. My pension currently has two parts: a 'preserved' final salary component, which I accumulated over a period of around 12 years; and a new 'alpha pension' that I have been contributing to since 2015.

If I leave/ resign now (well before the scheme retirement ages), what will happen to the value of these pensions by the time I can claim a pension(s)? Clearly inflation will erode their value, but I have found some references to 'cost of living' increases which adjust the pension amounts payable to compensate for inflation. For example, if the 'final salary' component is currently estimated at £10,000 a year when I retire based on my current salary, will I receive that amount down the road, or will I receive £10,000 adjusted for cost of living increases, which I imagine will be substantially higher? Is the 'alpha' scheme similarly adjusted after you leave the scheme?

And finally, historically have the cost of living increases been similar to inflation (CPI?) increases. Are the increases for recent years listed anywhere?

Many thanks in advance for your help.

hugheskevi

Both the final salary and alpha pension will increase each year in line with inflation after you leave.

Inflation is currently measured by the September CPI figure (uncapped).

hyubh

john19792 wrote: »

For example, if the 'final salary' component is currently estimated at £10,000 a year when I retire based on my current salary, will I receive that amount down the road, or will I receive £10,000 adjusted for cost of living increases, which I imagine will be substantially higher? Is the 'alpha' scheme similarly adjusted after you leave the scheme?

All public sector pensions in deferment or in payment, along with the SERPS and S2P components of the old state pension, receive the same yearly increases each April, which is currently defined as the annual CPI figure from the previous September, or zero if inflation was negative.

While technically the relevant government minister of the day confirms the figure each year, in practice public sector pension increases have never been treated as discretionary since the framework was introduced in the early 70s. Admittedly the switch from RPI to CPI in 2011 was notable, however this wasn't just slipped into a regular Pensions Increase Order. Also, compared to what it means in practice to have discretionary increases in a private sector scheme, public sector scheme members have little cause for complaint...

historically have the cost of living increases been similar to inflation (CPI?) increases. Are the increases for recent years listed anywhere?

Google 'Pensions Increase Order', e.g. here's the one for this year:

http://www.legislation.gov.uk/uksi/2018/333/made

More broadly, any website for a public sector scheme that has a page about 'pensions increase' will be what you want.

john19792

Thank you - very helpful replies

kidmugsy

hugheskevi wrote: »

Inflation is currently measured by the September CPI figure (uncapped).

What if pension rises for civil servants, MPs, and Bank of England employees were capped at (say) 5%? Does anyone else suspect that magically we would be unlikely ever to see inflation exceed 5% again?