Revaluation in deferment


When a member of a DB pension scheme leaves, having completed at least 2 years’ pensionable service, they become entitled to a preserved (or deferred) pension in respect of their accrued benefits.

Legislation currently requires such benefits to be revalued during the period of deferment. The Government’s intention being “to provide a degree of protection – but not total protection – against the impact of inflation”.

Prior to 6 April 2009, statutory revaluation was calculated by reference to the annual percentage increase in RPI, capped at 5% per annum. In respect of service on and from that date the statutory cap has reduced to 2.5%. From April 2011 the Government switched the index used to calculate statutory pension increases from RPI to CPI.