On Mar. 14, UK Treasury issued pensions increase (review) order 2025.
UK Treasury issued Pensions Increase (Review) Order 2025 (StIn 2025/343) and explanatory memo, which extends to England, Wales, Scotland, and Northern Ireland.
Pensions Increase Aligned with Prices Increase
Pensions in payment, pensions of members who have since left active service in a pension scheme (preserved pensions) must be increased in line with prices.
Such as annual increase in prices, so that value of those benefits is not eroded over time, and includes pension lump sums of members who have since left active service.
In relation to a lump sums pension scheme (preserved lump sums).
Pensions (Increase) Act 1971 (1971 Act) sets out official pensions for this purpose.
Social Security Pensions Act, 1975 (1975 Act), read with 1971 Act, provides for orders to be made setting out percentage increase for any year in which prices have rose.
In this regard most pension increases for public service pension members are provided with regard to these statutory provisions, including these orders.
Some benefits, however, including those paid under older military pension schemes, are provided under separate statutory provisions or comparable arrangements.
In a yearly direction as per s. 151 of Social Security Administration Act 1992 (1992 Act), the Secretary of State for Work and Pensions specifies the percentage.
Specifically the percentage by which additional pensions in long-term benefits (including the State Second Pensions) are increased, if level of prices has changed.
As per s. 59 of the 1975 Act, the level of increase for official pensions specified by annual Pensions Increase (Review) Orders is equal to that specified by the Secretary.
In particular the percentage specified by the Secretary of State for Work and Pensions to increase additional pensions in long-term benefits.
Increase that has been calculated is equal to percentage rise in the Consumer Prices Index measure of prices inflation (CPI) in the twelve months to the preceding Sep.
CPI calculated in the twelve months to September 2024 was 1.7%.
Effectiveness
For the tax year 2025/2026, this means the order will be eff. Apr. 7, 2025.
