Pension increases
Your pension will increase each year in line with the Pension Increase (Review) Orders issued by HM Treasury and passed by Parliament – increases are limited to a maximum of 5% per year.
The Increase Orders broadly reflect the Retail Price Index (RPI) in the preceding September. However, it is not possible for British Airways Pensions to quote the final increase until Parliament agrees the orders in the March immediately before the April increase.
As a pension holder, these increases are part of your rights and are not discretionary. We will write to you each year, usually in April, with full details of the increase applied to your pension.
I calculate my increase to be higher than you have told me why is this?
If you have reached State pension age AND you retired from British Airways after 5 April 1978, then you probably have a Guaranteed Minimum Pension (GMP) included in your total pension. The GMP is not increased by us. Instead, the Department of Work & Pensions will pay your increase on an amount similar to any GMP built up between 6 April 1978 and 5 April 1988.
However, for any GMP earned after 5 April 1988, we must pay any increase up to 3% and the DWP pays the rest in years where the increase is more than 3%. If it applies to you, the actual amount of your GMP will be shown in your increase letter. The additional part paid by the DWP will be called an ‘additional pension based on earnings since 1978' when shown by the DWP on any statements sent to you.
If you are receiving an AVC Pension (Annuity)
If you are receiving an AVC pension from us it is included and paid with your BA Pension.
If you are receiving a 'Variable' or 'Level' pension (retirements prior to 31 March 2007 only)
(This is where, on retirement, extra pension is paid up to the State Pension Age and a lower pension is paid afterwards)
If you are, the "variable"/"level" adjustments are ignored when your increase is worked out. So, if you have not yet reached State Pension Age, you do not get any increase on the extra pension you are receiving. If you have reached State Pension Age, your increases are worked out on the pension you would have been getting if you had never taken a "variable"/"level" pension.
If you 'Crystallised' your pension
(This is where normal pension
contributions stop before actual retirement, so that the pension is made
up of two portions)
If you did, and elected to receive a non-increasing (or partly non-increasing if you retired after 31 March 1997) additional (uplift) portion, then that portion does not receive any pension increases each year and remains fixed throughout retirement. The increase will only apply to the portion of pension you earned before your contributions stopped and any extra portion relating to service after 31 March 1997. If instead you elected to receive an increasing additional (uplift) pension your whole pension will receive increases in the way described above.