Lgps and inflation - anyone able to help?

Dansmam

Apologies for a bit of a niche question, MSE has a lot to answer for!
I came across a thread about the timing of inflation increases on deferred pension and now I'm wondering if I'm about to do myself out of years of compound increases for the sake of claiming deferred pension earlier than is sensible. 

I have been planning to claim  deferred lgps from when I hit 60 next year when the rule of 85 protects me from a chunk of reduction for early payment. This would be several months earlier than the (second) anniversary of me leaving work.
If I have correctly understood it, if I continue with the current plan 2021's 0.5% inflation uplift will apply. But if eke out the lockdown supply of beans, rice and toilet roll and wait until after the anniversary of leaving work lgps will uplift by the (likely quite a bit higher) inflation rate to be announced in November. 

Have I got this right? Lgps guidance indicates uplift in the first year of payment is reduced according to how long the pension is in payment in that year but beyond that no detail so clear as mud. 

Very grateful if anyone can cast light on how it works in practice.

Silvertabby

Dansmam said:

Apologies for a bit of a niche question, MSE has a lot to answer for!
I came across a thread about the timing of inflation increases on deferred pension and now I'm wondering if I'm about to do myself out of years of compound increases for the sake of claiming deferred pension earlier than is sensible. 

I have been planning to claim  deferred lgps from when I hit 60 next year when the rule of 85 protects me from a chunk of reduction for early payment. This would be several months earlier than the (second) anniversary of me leaving work.
If I have correctly understood it, if I continue with the current plan 2021's 0.5% inflation uplift will apply. But if eke out the lockdown supply of beans, rice and toilet roll and wait until after the anniversary of leaving work lgps will uplift by the (likely quite a bit higher) inflation rate to be announced in November. 

Have I got this right? Lgps guidance indicates uplift in the first year of payment is reduced according to how long the pension is in payment in that year but beyond that no detail so clear as mud. 

Very grateful if anyone can cast light on how it works in practice.

 The April 2022 increase (CPI as at the end of this September) will be applied on the first Monday on or after 6 April 2022, and is applied to both deferred benefits and pensions in payment.

If you take your benefits before then, then your pension in payment will receive this uplift.  However, the thing to watch out for is your automatic lump sum (if you have pre 2008 service) - if you take your benefits before the annual increase is applied then you will only get last year's CPI increase on your lump sum.  Defer payment until after increase date, however, and your automatic lump sum will also increase by 2022 CPI.

As you have already been deferred for over 12 months, It's the date the annual increase is applied that matters to you, not the anniversary of your date of leaving.

Dansmam

Silvertabby said:

 The April 2022 increase (CPI as at the end of this September) will be applied on the first Monday on or after 6 April 2022, and is applied to both deferred benefits and pensions in payment.

Thank you so much Silvertabby for your very helpful (and reassuring!) reply and the info about the effect on lump sum. I sometimes think I go down too many MSE rabbit holes but I am so glad I asked the question. Seems the thing to do is wait till after that magic Monday - I have a March birthday so only a few weeks later than planned. Thanks again Silvertabby, much appreciated.