Pensions in payment which have been built up before 1 January 2014 are guaranteed to increase in line with inflation each year up to 5% and subject to a minimum of 3%.
For benefits built up from 1 January 2014 consideration will be given by the Company to awarding discretionary pension increases on a regular basis and where such pension increases are granted; normally they will be effective on 1 April. In deciding whether or not to exercise its discretion and if so, the amount of such increase, the Employer will have regard to:
the funding position and solvency of the Fund;
the extent to which any funding plan agreed between the Employer and the Trustee is considered to be “on track”;
the trend in inflation - currently the Consumer Price Index (CPI) - over an appropriate period.
Where the Company exercises its discretion to award an increase, it will be effective from 1 April and at the lower of:
the rate of price inflation; and
3.0% per annum
In periods of deflation, as have been experienced in recent years, there will be no reduction in the level of pension, although the effects of the deflation may be taken into account in deciding on the appropriate level of increase to be given when inflation is later taken into account. This policy will be subject to future review.