The annual increase level to career average public sector pension schemes in 2020 have been announced, with fire service and armed forces’ schemes seeing the largest rise.
The increases, which take effect from 6 April 2020, are required to be at least in line with the rise in additional pensions (state earnings related pensions and state second pensions), which is in line with the Consumer Prices Index (CPI) up to September 2019 (1.7%).
Most public service schemes will rise by 1.7%, however the career average public service pension schemes introduced in 2014 and 2015 are revalued annually in relation to either prices or earnings, depending on the terms specified in the scheme regulations.
Service & % Increase:
Fire Service 4%
Armed forces 4%
Civil Service 1.7%
Local Government 1.7%
Annual increase level of career average public sector pension schemes 2020
Judicial, civil service and local government pension schemes that fall into this category will rise by the minimum 1.7%, while others’ increases were affected by their schemes’ revaluations.
Career average fire service and armed forces pensions will see the largest increase, both at 4%, while teachers’ pensions will rise by 3.3%.
NHS and police pensions in this category are set for increases of 3.2% and 2.95% respectively.
Public service schemes that have been in payment for less than a year will receive a pro-rata increase.
In a parliamentary statement, Chief Secretary to the Treasury, Steve Barclay, explained: “In the career average public service pension schemes introduced in 2014 and 2015, pensions in accrual are revalued annually in relation to either prices or earnings depending on the terms specified in their scheme regulations.
“The Public Service Pensions Act 2013 requires HM Treasury to specify a measure of prices and of earnings to be used for revaluation by these schemes.
“The prices measure is the Consumer Prices Index up to September 2019. Public service schemes which rely on a measure of prices, therefore, will use the figure of 1.7% for the prices element of revaluation.
“The earnings measure is the whole economy year on year change in average weekly earnings (non-seasonally adjusted and including bonuses and arrears) up to September 2019. Public service schemes which rely on a measure of earnings, therefore, will use the figure of 4% for the earnings element of revaluation.
“Revaluation is one part of the amount of pension that members earn in a year and needs to be considered in conjunction with the amount of in-year accrual. Typically, schemes with lower revaluation will have faster accrual and therefore members will earn more pension per year.”