NHS pension increase - why so low?

safe_hands2

My retired partner's NHS pension letter arrived today saying that this year's increase is 1.70%. That seems very low considering inflation and wage growth. 

Does anyone know how they arrive at that figure?

Dazed_and_C0nfused

safe_hands2 said:

My retired partner's NHS pension letter arrived today saying that this year's increase is 1.70%. That seems very low considering inflation and wage growth. 

Does anyone know how they arrive at that figure?

The CPI rate from the prior September.

Which was 1.7% in September 2024.

Flugelhorn

Yes Sept 2024 had a bit of a dip in the inflation rate so that hit all the public sector pensions etc - probably saved the government quite a bit compared with a couple of years back when we got 10.1%

Sarahspangles

safe_hands2 said:

My retired partner's NHS pension letter arrived today saying that this year's increase is 1.70%. That seems very low considering inflation and wage growth. 

Does anyone know how they arrive at that figure?

Although it 'feels' low, previous increases have been higher because the CPI %age for the previous September was higher. There is therefore no need to 'catch up'. There is no direct link with most public sector pensions to wage growth; the State pension does take this into account as one of its 'triple locks'.

MACKEM99

Flugelhorn said:

Yes Sept 2024 had a bit of a dip in the inflation rate so that hit all the public sector pensions etc - probably saved the government quite a bit compared with a couple of years back when we got 10.1%

Which year was the 10.1%?

Dazed_and_C0nfused

MACKEM99 said:

Flugelhorn said:

Yes Sept 2024 had a bit of a dip in the inflation rate so that hit all the public sector pensions etc - probably saved the government quite a bit compared with a couple of years back when we got 10.1%

Which year was the 10.1%?

September 2022 CPI, so pension increase would have been implemented in April 2023.

Sarahspangles

MACKEM99 said:

Flugelhorn said:

Yes Sept 2024 had a bit of a dip in the inflation rate so that hit all the public sector pensions etc - probably saved the government quite a bit compared with a couple of years back when we got 10.1%

Which year was the 10.1%?

10.1% effective April 2023. It was 6.7% in April 2024.

But in '22 it was 3.1%, and with inflation being more within more normal ranges we're likely to be back to 1 to 3% increases

JoeCrystal

safe_hands2 said:

My retired partner's NHS pension letter arrived today saying that this year's increase is 1.70%. That seems very low considering inflation and wage growth. 

Does anyone know how they arrive at that figure?

Still keep it real term though! Admittedly with CPI rather than RPI. It is not low, it is just maintaining its real term value.

Hoenir

1.7% rise is going to come as a shock to many people. 

Dazed_and_C0nfused

Hoenir said:

1.7% rise is going to come as a shock to many people. 

Not to the clients of the accountant who posted recently about a DB pension transfer, their clients receiving State Pension will be getting 5.8% 😉

safe_hands2

That all makes sense, thank you for the replies. Just an extra £20 a month with how costs keep going up is pretty rubbish.