How Your Pension Increases
Each April, if you are 55 or over and taking your LGPS pension, (or under 55 and have a dependents or ill health pension), your pension will be increased each year in line with the cost of living. This is based on Consumer Price Index (CPI) as at September of the previous year.
If you are under 55 and you are receiving a pension for any other reason, it will normally be paid at a flat rate until 55. At 55 your pension will increase to the amount it would have been, had it had the increases been added to your pension from your date of leaving.
How is an increase applied?
Shropshire County Pension Fund will tell you in April if there is an increase, what the increase is, when it is applied and your new pension amount.
If you are under state pension age, your LGPS pension is increased by the fund. Once you reach state pension age, the Department for Work & Pensions (DWP) pays the increase on the Guaranteed Minimum Pension (GMP) part of your LGPS pension, with your state pension. However, the fund pays the first 3% increase on the GMP for membership after April 1988.
All increases to a GMP for membership before 1988, are paid by the DWP as part of your state pension.
What is a Guaranteed Minimum Pension (GMP)?
Until April 2016 the LGPS was contracted out of the State Earnings Related Pension Scheme (SERPS) under the old state pension. So, if you were a member of the LGPS between 6 April 1978 and 5 April 1997, the LGPS must pay you a GMP based on the state pension you would have had if you were not in the LGPS.
Once you reach state pension age, your pension will be compared with this GMP and increased to the rate of your GMP, if it is higher. In most cases, your LGPS pension is higher than your GMP.