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Benefits payable on retirement

Increases to pensions in payment

Pension increases in retirement are important as they help your pension keep pace with inflation. Not all pension arrangements include pension increases.

If you are a member of a defined benefit scheme, depending on the rules of you scheme, your may have no increases, fixed rate increases, increases at a rate linked to inflation or salaries, or increases that are discretionary and may be paid if the scheme can afford them.

If you buy an annuity at retirement, you will be able to decide whether it remains level or increases during payment. However, the important thing to remember is that adding pension increases has a cost attached and this means that your own pension income will change, according to the options that you select.

The following table shows annuity payments allowing for different benefit options, based on a fund value of €100,000 and current market annuity rates (January 2016).

PensionMale at 65Female at 65
Basic Annuity€4,600€4,360
Annuity with guaranteed payment for 5 years€4,580€4,340
Annuity with 3% pension increases and guaranteed payment for 5 years€3,080€2,870

These figures are given for the purpose of illustration only. Although they are based on annuity rates actually available in January 2016, there is absolutely no guarantee that similar rates would be available in the event of an actual purchase in the future.