Understanding the Pensions Increase (Review) Order 2025
The Pensions Increase (Review) Order 2025 is a UK statutory instrument designed to protect the purchasing power of public sector pensioners. Issued annually by the Treasury, it mandates an increase in public service pensions based on inflation, specifically the Consumer Prices Index (CPI) figure from the previous September. For the 2025 order, the increase is set at 1.7%, reflecting the CPI figure up to September 2024. This order was formally published and specifies an effective date of April 7, 2025.
Who is Affected by the 2025 Order?
The 2025 Order applies to individuals receiving a public service pension, including retirees from roles such as civil servants, teachers, police, firefighters, and NHS workers, as well as their dependants. The increase is applied in two ways:
- Full Increase (1.7%): For pensions that began before April 8, 2024.
- Pro-Rata Increase: For pensions that started between April 8, 2024, and April 7, 2025. The 1.7% is adjusted based on the number of complete months the pension has been in payment up to April 7, 2025.
The Difference Between the Public Service Pension Increase and the State Pension Triple Lock
It is important to distinguish the public service pension increase from the State Pension's annual adjustment, known as the 'triple lock.' The triple lock ensures the State Pension rises by the highest of CPI, average earnings growth, or 2.5%. The public service pension increase, however, is solely based on CPI.
| Feature | Public Service Pension Increase | State Pension Triple Lock |
|---|---|---|
| Basis for Increase | Tied directly to the Consumer Prices Index (CPI) measure of inflation in the preceding September. | Rises by the highest of CPI, average earnings growth, or 2.5%. |
| Who is Affected | Retirees from public sector roles (e.g., civil servants, teachers, NHS staff) and their dependants. | All eligible individuals receiving the UK State Pension. |
| Official Document | Governed by the annual Pensions Increase (Review) Order, issued by the Treasury. | Part of the government's broader social security policy for State Pension uprating. |
| 2025 Increase Rate | Set at 1.7%. | The State Pension increase for April 2025 was 4.1% based on average earnings growth. |
How the Pro-Rata Increase is Calculated for Newer Pensions
For pensions that commenced between April 8, 2024, and April 7, 2025, the increase is calculated on a pro-rata basis. The full 1.7% increase is multiplied by a fraction representing the number of complete months the pension has been in payment up to April 7, 2025, divided by 12. For example, a pension starting on October 23, 2024, would receive a 0.71% increase.
Finding More Information and How to Stay Informed
For specific details on how the 2025 increase affects your pension, contact your pension scheme administrator. The official document, The Pensions Increase (Review) Order 2025, is available on the government's legislation website for detailed legal and procedural information.
You can read the full text of the Pensions Increase (Review) Order 2025 here.
What the 2025 Increase Means for Your Financial Wellbeing
The 1.7% increase, while potentially modest, helps public sector retirees manage the rising cost of living. This annual review offers an opportunity to review personal finances, including budgeting and other investments, to ensure they align with retirement goals.
Conclusion
The Pensions Increase (Review) Order 2025 is a crucial mechanism for adjusting public service pensions to account for inflation. Understanding the 1.7% increase, its calculation, and who is eligible is key for public sector pensioners to manage their retirement finances effectively. Contacting your pension scheme administrator for personalised information is recommended for a secure retirement.
