Armed Forces pensions, once awarded, are adjusted in April each year by the Consumer Price Index (CPI).
The CPI rate used is the CPI headline rate for the September prior to the April adjustment the following year. This rate is formally announced in October.
The CPI increase which will come into force this year is 0.5%.
This increase, known as the Pension Increase (PI), does not come into force on the 1st April but rather on the first Monday after the beginning of the new tax year – so, for 2021, it comes into force on 12th April.
There is a Government produced table which divides the year (1 April – 31 March) into 13 parts and the first PI is proportionate. The pensions of those leaving in the first few weeks of April will get the full PI in the following April. The increases for those leaving after the first few weeks of April are then paid in the following April on a sliding scale, culminating in those leaving in the final few weeks of March getting no PI adjustment at all in respect of that first year. The full increase is paid in subsequent years.
If you are leaving with a preserved AFPS 75 or AFPS 05 pension, or a deferred AFPS 15 pension, it will be increased until such time as you draw your benefits to take account of all the PIs that have occurred since you left.
If you are a member of the Forces Pension Society and would like to know more about PIs or any other pension issue, email us on pensionenquiries@forpen.co.uk.
If you’re not a member see more about us here
