Impact on pensions  (illustrative examples based on 2021/22 values)

Case 1: Grade 7

TPS – Career Average

Scenario (a) results in the pension being reduced by £100 per year

Scenario (b) results in pension being reduced by £290 per year

NOTE: the longer pay progression remains stalled the greater the reduction in pension as when compared to unrestricted progression.

TPS – Final Salary

These figures are more difficult to calculate because they are in reference to an individual’s final salary and so your earnings for any one year are less relevant to determining the pension due, but any holding back of progression up the pay spine could have a significant impact, especially the closer you are to retirement.

For example, let’s say that you have worked 40 years under the final salary scheme and have been kept at 7pt33 instead of being permitted to go to 7pt38 the impact on your pension, in today’s prices, could be as follows:

£3,800 lost pension per year, OR

£2,400 lost pension per year as well as a £7,300 reduction in the tax free lump sum you can claim on retirement.

Case 2: Grade 8

TPS – Career Average

Scenario (a) results in the pension being reduced by £190 per year

Scenario (b) results in pension being reduced by £930 per year

NOTE: the longer pay progression remains stalled the greater the reduction in pension as when compared to unrestricted progression.

TPS – Final Salary

These figures are more difficult to calculate because they are in reference to an individual’s final salary and so your earnings for any one year are less relevant to determining the pension due, but any holding back of progression up the pay spine could have a significant impact, especially the closer you are to retirement.

For example, let’s say that you have worked 40 years under the final salary scheme and have been kept at 7pt33 instead of being permitted to go to 7pt38 the impact on your pension, in today’s prices, could be as follows:

£7,300 lost pension per year, OR

£3,650 lost pension per year as well as a £10,959 reduction in the tax free lump sum you can claim on retirement.

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