Susan is in the scheme (from 1 April 2014) and earns £24,500 in the scheme year up to 31 March 2020. The amount which is added to their pension account is calculated as follows:
£24,500 / 49 = £500
So, at the end of the scheme year, £500 is added to their Pension Account. To make sure the amount keeps its value, the total in the Pension Account will be adjusted in line with the cost of living. If inflation was, say, 3%, the £500 in Susan’s account at the end of the scheme year (31 March 2020) would be increased on 1 April 2020 to £515.
In the following scheme year from 1 April 2020 to 31 March 2021 Susan earns £25,333, which means that the following amount is added to their pension account:
£25,333 / 49 = £517
This brings the total to £1,032. As before, to make sure the amount keeps it value, the total in the pension account will be adjusted in line with the cost of living. If inflation was, say, 3.1%, the £1,032 in the account at 31 March 2021 would be increased on 1 April 2021 to £1,064. If Susan was to retire on 1 April 2021 she would receive a £1,064 per year pension.
