Limited Price Indexation
The minimum annual rate of indexation which must be applied in the UK to employee pensions in payment or deferred pensions, where they relate to employment after 5 April 1997.
LPI is the lesser of the actual rate of inflation and either 5% or 2.5% depending on
- (1) the date when the pension entitlement was accrued and
- (2) whether the pension is in payment or deferred.
However, UK pension schemes can make increases in pension payments over and above LPI if they wish and if their scheme rules allow it.