Preserved Pensions and How Revaluation Works. We’ve had many requests from people wanting to know about Preserved Pensions and How Revaluation works.
What is a Preserved Pension?
If you have contributed to a company pension scheme for at least two years, that retirement plan and its benefits will remain preserved or intact even if you leave the company. Hopefully, if it performs well, the pension fund will keep growing each year until retirement, death or if you transfer the money to another scheme.
What is Revaluation?
Revaluation is a scheme that was put in place by the government to protect Preserved Benefit Pensions from being diminished over time by inflation.
In essence, an annual percentage increase is applied to the Guaranteed Minimum Pension. Currently, this is determined by Full Rate increases or Fixed Rate Increases. Full Rate percentages are based on National Average earnings, while Fixed Rates depend on the termination of pensionable service. Which of these revaluation rates is placed on your pension depends on the rules of your scheme and what legislation was in place at the time.
Further Reading: Pension Auto Enrolment
Further Reading: Pensions in the UK Wikipedia