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inflation increase

Discussion in 'Retirement' started by birdonawire, Feb 24, 2012.

  1. Forgive my ignorance .... are teacher pensions going up in April in line with inflation. I am planning on ARB in May .... will this affect the amount of maxed out lump sum I can take? Being a bit thick here ...sorry!

  2. lindenlea

    lindenlea Star commenter

    If I understand it accurately our pensions go up in line with CPI as measured in the September of the previous year so last Septmeber CPI was running at 5% so - wehey - that's a nice little boost this April.
    I may not be right about this so look forward to posts from other pensioners who may be better informed.
  3. I think you are right Lindenlea. That's how I understand it. However, for the OP they will only get that increase if they are already taking their pension. Salaries are currently frozen so lump sums aren't going up. I think.
  4. Its my understanding that the lump sum and pension payments are based on the best three consecutive salaries during the previous 10 years. But these salaries are index-linked for the purposes of the calculation. Therefore I think that the value of the lump sum and pension payments will go up by about 5% in April, whether one is currently taking the pension or not.
    Am I right?
  5. Dunteachin

    Dunteachin Star commenter

    Yep, 5.2% increase in April for those of us already drawing our pensions.
  6. Yes, Dunteachin, but what about those not yet drawing the pension but intend doing so in May or September? This will make a difference of about £3000 to a teacher on average salary with about 30 years contributions, so its not trivial. And there are many of us in this position.
  7. lindenlea

    lindenlea Star commenter

    Surely the rise only affects people already taking their pension. While you are working I presume your income is governed by the decisions relating to earned incomes for teachers. Just at the moment the rise for pensions is good - we are "lucky" that inflation was running high in September 11. In the future it may be very different. I don't want to offend you but it sounds like you want to cherry pick the benefits of being on a pension while still earning a full salary.
  8. When I look at my 'pension predictor' on the TP website, my lump sum and my predicted pension are based on an annual salary larger than I have ever earned. Why? Because the 'final salary' is actually an average of the best three consecutive years during the past ten years, but this in index-linked. This is why my 'final salary' for the calculation is more than I am earning. Everyone else should find the same thing applies. My point is this: surely this index-linking will be applied for the final year as well. So the recent rise for those already taking their pension will also apply for those about to take it.
    If, in the future, the actual pay rises for those still working are greater than inflation then I wouldn't expect any more than inflation.
    If I'm wrong - I may well be - please point out where my logic is going amiss.
  9. In calculating the 'average salary', index-linking is not applied to the final year only the previous nine. However, for most teachers at the moment the final year will not included as one of the best 3 consecutive years. So I expect that many teachers will find their 'average salaries' are increasing in line with CPI while their salaries are frozen.
  10. lindenlea

    lindenlea Star commenter

    ( Actually I don't get this but thanks for trying)
  11. Thanks, ColinWilson. My extra £3000 seems more secure.

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