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Pensions are constantly evolving and there may be changes that affect your membership, so it’s important to keep up to date with what’s happening.
Impact of inflation and the security of your benefits
20 Sep 2022
Your deferred pension before it is put into payment, and your pension once in payment, increase in the same way. This is an increase annually each April by the previous September Retail Price Index (RPI). If the September RPI is more than 5%, the Company may limit the increase to an amount less than the September RPI but no lower than 5%.
If you are thinking about transferring your Scheme benefits to a Defined Contributions (DC) arrangement, the impact of inflation will depend on whether your investment returns keep pace with inflation and how you access your DC benefits. For example if you buy an annuity, the level of protection will depend on what you buy. Or if you decide to access your DC benefits via income drawdown then you may have a difficult choice between drawing down more now in order to maintain your current standard of living and trying to preserve your savings for use in later years.
Also unlike your Scheme benefits, which are defined and funded by the company, if you transfer to a DC arrangement you will take on additional risks as you will lose the guaranteed lifetime income from your DC benefits, for you and your dependants, as well as being open to volatility (DC benefits go up and down in value).
