I have seen engineers using 1% of pile diamater as an estimate for setllement pile when the maximum load (or capacity) is reached. Where did this come from? Any references?
That actually could be a very small number and sounds like a value of pile shortening when fully loaded. Possibly not considering any toe movement (settlement).
I haven't checked it but I suspect that this is a rule of thumb for end bearing piles of a particular type. This would be the elastic shortening of the pile. Please check your sources when dealing with 'rule of thumb'. There is often a good reason but you should know how it is derived. If you don't don't use it.
For your particular case I wouldn't even begin to quess. If the pile was endbearing then you should look at elastic shortening of the pile.