“(a) increasing the part of the annual rate of the pension mentioned

in subsection (4ZC)(b) by—

(i) the percentage increase in the retail prices index for the

reference period, being a period determined, in relation

to each periodic increase, under the rules, or

(ii) if lower, the default percentage for that period,

5while

(b) increasing the rest of the annual rate by—

(i) the percentage increase in the consumer prices index for

the reference period, or

(ii) if lower, the default percentage for that period.”

(4ZE) 10In subsections (4ZA) and (4ZC) “the relevant time” means—

(a) in relation to a pension which was in payment before 2011, the

beginning of 2011;

(b) in any other case, the time when the pension becomes a pension

in payment.

(4ZF) 15If only part of the pension is attributable to pensionable service or, as

the case may be, to payments in respect of employment carried on on

or after the appointed day, in subsections (4) to (4ZD) references to the

annual rate of the pension are references to so much of that rate as is

attributable to that part.

(4ZG) 20For the purposes of subsections (4) to (4ZD) the default percentage for

a period is the percentage for that period which corresponds to—

(a) in the case of a category X pension, 5% per annum, and

(b) in the case of a category Y pension, 2.5% per annum.

(4ZH) In subsections (4) to (4ZD)—

• 25“consumer prices index” means—

  (a)

  the general index of consumer prices (for all items)
  
  published by the Statistics Board, or

  (b)

  where that index is not published for a month, any
  
  substituted index or figures published by the Board;

• 30“retail prices index” means—

  (a)

  the general index of retail prices (for all items) published
  
  by the Statistics Board, or

  (b)

  where that index is not published for a month, any
  
  substituted index or figures published by the Board.”

(6) 35Section 40 of the Welfare Reform and Pensions Act 1999 (indexation of certain

pensions giving effect to pension credit rights) is amended as follows.

(7) In subsection (1) for “increases in the retail prices index” substitute “relevant

percentage increases”.

(8) After subsection (2A) insert—

“(2AA) 40In subsection (1) “relevant percentage increases” means percentage

increases estimated by the Secretary of State from time to time for the

purposes of paragraph 2(3)(a) of Schedule 3 to the Pension Schemes Act

1993 for revaluation periods of 12 months.”