Pension escalation and indexation

Pension update restrictions occur during the first week of July. This is known as pension escalation. Our Pensions team uses this time to calculate the minimum pension requirements for each pension account going into the new financial year. 

Because the accounts are being changed, we put restrictions in place to prevent certain actions from happening that could affect pension accounts. The following restrictions occur during pension escalation:

• No ad hoc pension payments
• No lump sum payments from a pension account
• No product switch applications to a pension
• No closing of a pension account. This is to avoid missing minimum legal requirements
• No Pension Updates to commence.

Any requests made during this period will still be accepted. However, we won’t process them until after the escalation period.

Your client’s new pension amount for the new financial year will depend on the new calculated minimum amount (see Minimum pension payments) and the escalation indexation. 

The escalation indexation options available are:

• None: The client will continue to receive a fixed amount unless it is below the minimum. In this case it will revert to the minimum
• Fixed Percentage: The payment will increase from the previous year by the specified percentage
• CPI: The payment will increase from the previous year by CPI
• Minimum: The client will receive the minimum amount required for the financial year
• Maximum (TTRs only): The client will receive the maximum amount required for the financial year.

If the intention is to have a specific amount which exceeds the minimum for the new financial year, the escalation indexation will need to be “none”. If the new pension minimum isn’t higher than the existing amount, the higher amount will remain.