The pensions of all beneficiaries are increased on 1 January each year in line with any increase in the Index of Retail Prices (RPI) for the twelve months ended in the previous November (or a proportional part of this increase for pensions in payment for less than the full twelve months). All beneficiaries means former contributors, widows, widowers, adult dependants and children.

For former contributors who exercised the Levelling Option, Levelling Option additions are not increased and from State Pension Age, RPI increases are added to pension before taking off the Levelling Option deduction. For former contributors with an entitlement to a Guaranteed Minimum Pension (GMP) from State Pension Age, RPI increases on the GMP element of pension will be paid separately from RPI increases on the rest of the pension. Similar provisions apply to the pensions of widows and widowers with a GMP entitlement from the date the Department of Work and Pensions notifies the Scheme that a GMP is payable. This is explained in more detail later.

Bonus Augmentations

Pensions may be increased if there are future valuation surpluses which enable the Trustees to improve benefits by awarding Bonus Augmentations. Bonus Augmentations will be kept separate from the rest of your pension entitlement. Bonus Augmentations have been awarded with effect from 1 April 1996, 1998 and 2001.

Levelling Option

If you took the levelling option when your pension started the Levelling Option addition stops when you reach State Pension Age and your pension is reduced from then on by the amount of the Levelling Option deduction. The operation of the Levelling Option is described more fully in the section relating to Deferred Pensioners. From 1 April 2003 the Levelling Option terms are being improved. The amount of Levelling Option deduction will be reduced and, subject to obtaining Revenue approval, the deduction will cease from age 80.

Additional Voluntary Contributions

If you paid Additional Voluntary Contributions, you will have been receiving a pension from an annuity contract from the date your BCSSS pension started. Whether or not this provides for annual increases, and the amount of annual increases, will depend on the arrangements you made at the time the annuity was purchased.

Guaranteed Minimum Pensions

Members who contributed to the Scheme after April 1978 were contracted out of the State Earnings Related Pension Scheme (SERPS). The contracting out legislation requires the pension paid by the Scheme to be at least as good as the pension that would have been earned in SERPS. This equivalent amount of pension is called the Guaranteed Minimum Pension (GMP).

The GMP is not an additional pension, it forms part of the Scheme pension.

GMPs for former contributors

The Scheme’s liability to pay a pension at least equal to the GMP in respect of a former contributor does not arise until State Pension Age. When a member reached State Pension Age the Department of Work and Pensions notifies the Scheme of the amount of GMP due. For most members, the Scheme pension will be more than the GMP, but if it is not, the pension has to be increased so that it is equal to the GMP. From State Pension Age the special arrangements for RPI increases explained below will apply.

Widows and widowers

The widows and widowers of contributors who were contracted out of SERPS may also have a GMP entitlement. For widows, this will be half of the contributor’s GMP. For widowers the entitlement will be half of the contributor’s GMP arising from service after April 1988.

The Department of Work and Pensions will notify the Scheme of the amount of GMP due to widows and widowers who meet the qualifying conditions for payment. For most beneficiaries, the Scheme pension will be more than the GMP. For these beneficiaries, the only effect of their GMP entitlement will be that RPI increases on GMP will be paid separately from RPI increases on the rest of their pension. If the GMP is more than the Scheme pension, then the pension has to be increased so that it is equal to the GMP.

Widowers of Scheme members who did not pay family benefit contributions will not be entitled to a Scheme pension. However, they may be entitled to a pension from the Scheme of half their wife’s GMP earned after April 1988.

Application of RPI increases

The GMP part of the pension is increased in accordance with the contracting out legislation. The arrangements are as follows:

• for GMP arising from contributing service between April 1978 and April 1988 the State will pay RPI linked increases. The first increase is paid from the April following the attainment of State Pension Age with RPI linked increases payable from each subsequent April. The amount of the increase is paid with the basic State pension.
• for GMP arising from contributing service after April 1988 the BCSSS pays RPI increases up to 3% a year. In any year that RPI has increased by more than 3% the State will make up the increase to the RPI level. These increases are also payable from April each year. The arrangements for payments made by the State are the same as described above.