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<p>Section 59 of the Social Security Pensions Act 1975 (as amended) read with the
Pensions (Increase) Act 1971 (as amended) provides for public service pensions to
be increased annually by the same percentage as State additional pensions (State Earnings
Related Pension and State Second Pension). State additional pensions were increased
by 3.1 per cent from April 2022, in line with the increase in the Consumer Prices
Index (CPI) in the 12 months from September 2020 to September 2021. From 11 April
2022, most public service pensions in payment were also increased by the same percentage,
with pro-rata increases for those in payment for less than a year.</p><p> </p><p>The
Pensions Increase (Review) Order 2022 covers “official pensions,” which are those
pensions listed in Schedule 2 of the Pensions (Increase) Act 1971. This covers most
public service pensions. There are, however, also a small number of other schemes
(which are not official pensions) where the benefits are increased by analogy with
official pensions under the rules applying to those schemes.</p><p> </p><p>Official
pensions are increased as specified within the annual Pension Increase (Review) Orders,
and the Order applies to a pension that began before or during the 12 months before
the date that the Order commences and where the pension satisfies a condition qualifying
for pension increases to be paid. The pensions increase is therefore usually paid
to recipients aged 55 and over, or those aged less than 55 who are in receipt of a
survivor's pension, or a pension paid on account of ill health.</p><p> </p><p>Pensions
increases also apply to pensions in deferment, although the entitlement arises only
when the pension comes into payment and the recipient satisfies a qualifying condition.
Members currently accruing further pension benefits in schemes covered by these indexation
provisions will also be entitled to receive increases under Pension Increase Orders
and some who retire in future, particularly in the next few years, might be entitled
to increases under the Pensions Increase Order 2022.</p><p> </p><p>Those affected
by the Pension Increase (Review) Order 2022 in the 2022/23 financial year are therefore
likely to equal:</p><ol><li>Total public service pensions in payment;</li><li>Total
public service pensions in deferment, most of which would be affected in due course;</li><li>A
proportion of total public service pensions still accruing, where some future pensions
in payment and deferment might in due course be affected by the 2022 Order. That proportion
cannot be readily assessed as it will depend on many variable and unknown factors,
including future decisions by members about careers and retirements.</li></ol><p>
</p><p>Table 2 of the last ONS Occupational Pension Schemes Survey, assessing data
up to 2019, estimated that there were then 5.3 million public sector pensions in payment;
4.7 million deferred public sector pensions; and 6.6 million active members of public
sector pension schemes. However, this data will also include a small proportion of
members who, for example, have defined contribution pensions and are not in arrangements
necessarily affected by the Pension Increase (Review) Order 2022.</p><p> </p><p>In
addition to those noted above, some private sector scheme rules provide that the defined
benefit pensions of some or all members will increase in line with increases applying
to official pensions.</p><p> </p><p>A further Pensions Increase (Review) Order will
be made for the 2023/24 financial year, which would allow for movements in prices
since the previous assessment based on September 2021 CPI.</p>
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