Deferred Pension Revaluation

Hello ….

Scenario

Person with a deferred benefit from a DB scheme. It gets revalued every year as per Pensions Act. Latest revaluation covers the year to 31/12/2023.

Person retires in Jan 2025 and draws their pension before the Pension Revaluation percentage for 2024 is actually released (see Note below)

Does this person miss out on the revaluation for 2024 or will their benefit … which is now in payment …be adjusted.

Note : Minister Humphreys did not release the revaluation percentage for 2023 until March 2024.

The administrators can calculate the revaluation once the Dec CPI is releases, usually third week in January. Even if you retire before that they can backdate the increases when known

Thanks for the reply. The administrators could do this but is there a legislative requirement for them to do so. That is the question.

Also worth mentioning that CPI (as calculated by CSO) for year to Dec 2021 was 5.4%-5.5%. However the Ministerial order ((SI 127 of 2022) said the revaluation percentage for 2021 was only 2.4%. So administrators would be wise not to try to anticipate the revaluation percentage themselves.

I'm surprised this hasn't come up before and perhaps some of the pension specialists on here may have encountered this situation in a real life scenario

Many thanks

@GSheehy
@LDFerguson
@Steven Barrett

The calculation is average CPI over the 12 month period capped at 4%. That’s how the 2.4% was calculated. Some rules may be higher. I don’t know of any administrators who wait for that order tbh and have worked in a few companies that do pension scheme admin.

I manage a pension scheme and our admin team apply the revaluation as soon as we have the calculation in third week in January. The revaluation has to be applied, so even if pension goes into payment before revaluation is applied the next monthly payment would be adjusted and back dated to when pension commenced.

@DBL2018 It took me ages at the time to work out how Minister Humphreys arrived at 2.4%, but yes that is how she did it.

DBL2018 said:

The revaluation has to be applied, so even if pension goes into payment before revaluation is applied the next monthly payment would be adjusted and back dated to when pension commenced.

Click to expand...

This is what I would have expected but when I asked Mercer and got no reply at all and the Pensions Authority who ignored my direct question (re backdating) and just gave me a stock paragraph on revaluation I did begin the wonder.

Good to get a answer from someone actually dealing with issues such as this in the real world. Thank u taking the time. Very useful.

Hi Dave,

Would you mind showing me the calcs per your post above please? I'm just interesting in seeing the basis - thanks

Hello @jasdpace@gmail.

I reckon she did something along these lines. All figures are on the cso.ie website.

Thanks Dave