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OPS Revaluation Order 2002 Published
by Ian Neale 06/12/2002 Printer-friendly version of this page
The Occupational Pension Schemes (Revaluation) Order 2002 (SI 2002/2951) was laid before Parliament on 5 December and comes into force on 1 January 2003. The Order specifies the percentage by which deferred benefits coming into payment (at NPA) under a final salary scheme during the calendar year 2003 must be revalued. This depends on how many completed periods of 365 days have elapsed since the individual left pensionable service. The figures are as follows:
Number of completed
365-day periods |
Revaluation
Percentage |
0 |
0.0% |
1 |
1.7% |
2 |
3.4% |
3 |
6.8% |
4 |
8.0% |
5 |
11.5% |
6 |
15.5% |
7 |
17.9% |
8 |
22.5% |
9 |
25.2% |
10 |
27.5% |
11 |
32.0% |
12 |
37.5% |
13 |
52.4% |
14 |
64.0% |
15 |
73.4% |
16 |
80.7% |
17 |
86.3% |
The figure corresponds to either the rise in prices or 5% pa compound, whichever is the lower, over the whole of each period of deferment.
This is also known as 'limited price indexation' or LPI. Indeed, the Revaluation Order also determines the LPI rate to be applied (eg to pensions in payment based on post-5.4.97 pensionable service) for the following calendar year.
The Revaluation Order is also relevant where a pension debit has to be taken into account for correct calculation of Revenue Maximum Benefits or maximum contributions to a fully insured money purchase scheme or a SSAS, or for the headroom check on contributions to an AVC or FSAVC arrangement.
In the case of a contracted-out scheme, this revaluation does not apply to any GMP element of benefits accrued to 5.4.97. GMPs are separately revalued to State Pension Age, by either a fixed rate or in line with Section 148 (formerly s. 21) Orders. The latter are officially known as Revaluation of Earnings Factors Orders and should not be confused with Revaluation Orders as above.
Aries comment
This year's Revaluation Order has been laid 13 days later than the 2001 Order. Publication as late as this increases the already acute pressure on software suppliers and scheme administrators, who are required to use the new figures in all relevant contribution and benefit calculations from 1 January. (We have managed to incorporate them in the new release of APS, but only just.) The Revaluation Order depends on the September RPI figure, which is normally published on the second Tuesday in October. Aries is in consultation with the DWP and the SPC, seeking optimisation of the process to avoid repetition of this year’s delay.
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