The above Order under which deferred pensions other than Guaranteed Minimum Pensions (GMPs) are revalued for those reaching normal pension age in 2010, has now been made.
Following news that the retail prices index for the period to 30 September 2009 was 1.4 per cent down, schemes will not be obliged to revalue deferred pensions beyond 2008 levels for deferred members reaching normal pension age during 2010.
The DWP’s annual revaluation order for schemes using the final salary revaluation method (which applies to most private sector defined benefit schemes) sets revaluation percentages for non-GMP benefits at zero for the 2009 calendar year.
In addition to setting a percentage for schemes that caps limited price indexation (LPI) revaluation at 5 per cent, the DWP is now required to set a lower revaluation percentage for schemes that are affected by the 2.5 per cent LPI cap permitted for future service from 6 April 2009 under the Pensions Act 2008. The impact of the inflation figures means that this too has been set at zero for 2009.