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CPI increase announced as 3.1%

The CPI increase which will come into force next April has been announced as 3.1% by the ONS. This is the figure that will be used to increase all Armed Forces pensions in payment from April 2022.

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 always formally announced in October.

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 2022, it comes into force on 11th April.

The first PI is proportionate and is paid in accordance with a Government produced table* which divides the year (1 April – 31 March) into 13 parts.  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 in 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 an AFPS 75 Immediate Pension, it will be paid at a flat rate until you are 55, at which point the original pension amount (so, before commutation) will be increased by all the PIs that have occurred since you retired. PIs will be applied each April thereafter.

If you are leaving with an invaliding pension, PIs will be added each April.

If you are leaving with a preserved AFPS 75 or AFPS 05 pension, or a deferred AFPS 15 pension, your pension will be adjusted by CPI each year until you draw your benefits and then every year thereafter. 

*2022 table is updated in January

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