Public service pensions continue to be among the very best available.
Legislation governing public service pensions in payment requires them to be increased annually by the same percentage as additional pensions (State Earnings Related Pension and State Second Pension). Public service pensions will therefore be increased from 10 April 2023 by 10.1 per cent, in line with the annual increase in the Consumer Prices Index up to September 2022, except for those public service pensions which have been in payment for less than a year, which will receive a pro-rata increase.
Separately, in the career average revalued earnings 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 HMT 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 2022. Public service schemes which rely on a measure of prices, therefore, will use the figure of 10.1 per cent 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 2022. Public service schemes which rely on a measure of earnings, therefore, will use the figure of 7 per cent for the earnings element of revaluation.
As announced by the then Secretary of State for Health and Social Care as part of the Government’s Plan for Patients on 22 September 2022, the effective date of revaluation will be 6 April 2023 for the NHS Pension Scheme England & Wales, subject to a consultation by the Department for Health and Social Care. The NHS Pension Scheme (Scotland), the Local Government Pension Scheme England & Wales and the Local Government Pension Scheme (Scotland) will also use 6 April 2023 as the effective date, subject to consultation and other processes by the Scottish Government and the Department for Levelling Up, Housing and Communities. For all other schemes in scope of this Order, the effective date of revaluation remains 1 April 2023.
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. The following list shows how the main public service schemes will be affected by revaluation:
Revaluation for active member
This statement has also been made in the House of Lords