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Pension increases

Understanding yearly pension increases

Pension benefits increase in line with the cost of living each year and are linked to the Consumer Price Index (CPI).

The pension increase is effective each year from the first Monday in the new tax year.

If you retired from your employment due to permanent ill health, pension increases can be applied to your pension from any age.

Based on the Consumer Price Index (CPI) rate of inflation for September 2025, your LGPS pension will increase by up to 3.8% from Monday 6 April 2026. As the increase to your pension applies part way through April, your April payment will include both the new and old rates. The new rate will be seen in full from the May instalment of your pension.

The first increase to your pension after retirement (from active membership) will normally only be a proportion of the full increase, depending on how many months your pension has been in payment during the year.

Important: If some of your pension is made up of Guaranteed Minimum Pension (GMP) then you may not get the full increase applied to your pension. More information can be found in the 'Increases from your State Pension Age (GMP)' dropdown table below.

If you reached State Pension Age before April 2016

From your State Pension Age (SPA) payment, increases to your pension may be shared between Gloucestershire Pension Fund and the Government. This is because the LGPS guarantees to pay you a pension that is at least as much as you would have earned had you not been contracted out of the State Earnings Related Pension Scheme (SERPS) at any time between 6 April 1978 and 5 April 1997. This is called the Guaranteed Minimum Pension (GMP).

Pension element

Party responsible for paying increases
Pre 88 GMP: GMP earned between 6 April 1978 and 5 April 1988 Pension Increases are paid by the Government with your State Pension.
Post 88 GMP: GMP earned between 6 April 1988 and 5 April 1997 The first 3% of the pension increase of this element of your pension is paid by Gloucestershire Pension Fund. Any increase above 3% will be paid by the Government with your State Pension.
Non-GMP: Pension in excess of GMP Pension increases will be paid in full by Gloucestershire Pension Fund.

Your pay slip indicates how your pension is broken into these categories as applicable.

 

If you reached State Pension Age from April 2016

Your pension is still split between GMP and non-GMP elements, but due to changes made to the State Pension, all elements of your pension will receive full pension increases (after the first year, where relevant) and therefore there is no difference in how GMP and non-GMP elements to your Gloucestershire Pension Fund LGPS pension are increased.

If you reached State Pension Age before April 2016

From your State Pension Age (SPA) payment, increases to your pension may be shared between Gloucestershire Pension Fund and the Government. This is because the LGPS guarantees to pay you a pension that is at least as much as you would have earned had you not been contracted out of the State Earnings Related Pension Scheme (SERPS) at any time between 6 April 1978 and 5 April 1997. This is called the Guaranteed Minimum Pension (GMP).

Pension element

Party responsible for paying increases
Pre 88 GMP: GMP earned between 6 April 1978 and 5 April 1988 Pension Increases are paid by the Government with your State Pension.
Post 88 GMP: GMP earned between 6 April 1988 and 5 April 1997 The first 3% of the pension increase of this element of your pension is paid by Gloucestershire Pension Fund. Any increase above 3% will be paid by the Government with your State Pension.
Non-GMP: Pension in excess of GMP Pension increases will be paid in full by Gloucestershire Pension Fund.

Your pay slip indicates how your pension is broken into these categories as applicable.

 

If you reached State Pension Age from April 2016

Your pension is still split between GMP and non-GMP elements, but due to changes made to the State Pension, all elements of your pension will receive full pension increases (after the first year, where relevant) and therefore there is no difference in how GMP and non-GMP elements to your Gloucestershire Pension Fund LGPS pension are increased.

Prior to April 2016, individuals with sufficient National Insurance (NI) qualifying years would receive the basic State Pension and also build up entitlement to the additional State Pension (called S2P, and before that, SERPS). Members of the LGPS (as well as a number of other workplace pension schemes) were 'contracted out' of the additional State Pension and as a result they paid lower National Insurance contributions during their period of employment. To take into account that some individuals paid less into the NI system, the amount of State Pension such members would receive from the Government will be lower than that received by people with similar earnings who were not contracted-out.

While those who were contracted-out may not be entitled to the full amount of new State Pension, they will instead receive some of their pension income through a different route. The workplace or personal pension that the individual paid into instead of the additional state pension should include an amount that, in most cases, will be the equivalent of the additional state pension they would have received had they not been contracted out. This is known as the Contracted-Out Pension Equivalent (COPE) amount. However, the COPE amount forms part of the total benefits under the scheme. It is not being paid in addition to those benefits and will not be identified separately.

The Department for Work and Pensions (DWP) introduced the estimated COPE amount to help individuals who have previously been contracted-out see how NI contributions paid before 6 April 2016 will contribute to their overall pension income. The COPE amount shown on a State Pension Forecast is an estimate of the amount that the workplace or personal pension scheme will pay as a result of contracting out. It is only an estimate because the amount that a workplace or personal pension scheme will pay depends on the particular regulations of that scheme. The estimate is based on the National Insurance records that the Department of Work and Pensions holds for each individual. 

You can find more information about the COPE amount on the Government website . If you have any questions about this please contact the DWP Pension Service .

Prior to April 2016, individuals with sufficient National Insurance (NI) qualifying years would receive the basic State Pension and also build up entitlement to the additional State Pension (called S2P, and before that, SERPS). Members of the LGPS (as well as a number of other workplace pension schemes) were 'contracted out' of the additional State Pension and as a result they paid lower National Insurance contributions during their period of employment. To take into account that some individuals paid less into the NI system, the amount of State Pension such members would receive from the Government will be lower than that received by people with similar earnings who were not contracted-out.

While those who were contracted-out may not be entitled to the full amount of new State Pension, they will instead receive some of their pension income through a different route. The workplace or personal pension that the individual paid into instead of the additional state pension should include an amount that, in most cases, will be the equivalent of the additional state pension they would have received had they not been contracted out. This is known as the Contracted-Out Pension Equivalent (COPE) amount. However, the COPE amount forms part of the total benefits under the scheme. It is not being paid in addition to those benefits and will not be identified separately.

The Department for Work and Pensions (DWP) introduced the estimated COPE amount to help individuals who have previously been contracted-out see how NI contributions paid before 6 April 2016 will contribute to their overall pension income. The COPE amount shown on a State Pension Forecast is an estimate of the amount that the workplace or personal pension scheme will pay as a result of contracting out. It is only an estimate because the amount that a workplace or personal pension scheme will pay depends on the particular regulations of that scheme. The estimate is based on the National Insurance records that the Department of Work and Pensions holds for each individual. 

You can find more information about the COPE amount on the Government website . If you have any questions about this please contact the DWP Pension Service .