CPI increases in Civil Service Premium Pension Scheme in Deferment

CloesUnc

Apologies if this has been answered previously, but I can't find a definitive answer on this.

From the Further Information section of the CS Pension Scheme website it states:

Final pensionable earnings

These are the earnings on which we base your premium pension. Your final pensionable earnings will be whichever is the best of:

• your last 12 months’ pensionable earnings; or
• your highest pensionable earnings in any of the last four complete scheme years; or
• your highest average pensionable earnings in any period of three complete scheme years during the last 13 years ending on your last day of service.

A scheme year is the period from 1 April to 31 March.

We will take account of rises in the cost of living in making the comparison.

My question is how are rises in the cost of living taken into account? If my highest earnings were, for example, in the year four years earlier than my retirement date, would my calculated final salary pension be uplifted for each of those four years in line with the CPI figure for each of those years.

Thanks for any information.

pinnks

Your final 12 months are simply your actual pensionable earnings in that final 12 months.

The highest in the final 4 scheme years is a comparison of your "scheme year -4" pensionable earnings indexed forward using the CPI for each of the 3 years that follow, using CPI from the previous September, with scheme "Year -3", "year -2 and "year -1" similarly indexed.  Whatever is the highest of those 4 amounts is the measure of your final pensionable earnings under this bullet.

The 13-year rule is similar but you index each year using the RPI for RPI/CPI years to September 2009 and CPI for September 2010 onwards, then create a series of 3 consecutive-year averages from those indexed amounts, and then select the highest of those average amounts as your final pensionable earnings under this bullet.

Time to create a spreadsheet - well, that's what I did as MyCSP flatty refused to give the numbers and the ABS was useless (at that time, at least) and it came out within pence of my actual award. 

Given the impacts of austerity (i.e. no pay rises etc), you are probably still looking at the 13-year rules as the best of the 3 calculations.  At some point that will unravel and you'll get a different outcome but I think it will take a few more years to reach that point.  I retired in April 2019 and the 13-year rule was about 13% above the best of the final 4 years - and that was a few % above my final salary too, so the decision to switch to Premium was a good one, with the benefit of hindsight...

CloesUnc

Brilliant! Thanks very much pinnks for your reply, it's much clearer now.