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Dependants Benefits

If you are reading this the chances are that your mind is firmly focused on leaving the Armed Forces and settling into civilian life.  Some of you will be leaving with immediate pensions but the vast majority will have preserved pensions (PP) or deferred pensions (DP).  Whether the pension is in payment or not, if you have dependants, they may be eligible for benefits in the event of your death.  In this article we look at what an adult dependant might expect to receive from your pension scheme should the worst happen.

The picture is complicated by the fact that there are currently three Armed Forces Pension Schemes (AFPSs).  AFPS 75 closed to new members on 5 April 2005 when AFPS 05 was introduced.  AFPS 05 closed to new members on 31 March 2015.  AFPS 75 or AFPS 05 members who were age 48 or over on 1 April 2015, remained in those schemes but most of you were transferred to AFPS 15 on 1 April 2015 so will have entitlements from both your new scheme and your old.     

Looking first at AFPS 75, adult dependants benefits are limited to spouse and civil partner, and their treatment depends upon whether or not your pension is in payment.

If  you leave and die with your pension in payment, your spouse or civil partner will receive a Short Term Family Pension equal to the pension in payment on the date of  your death, payable for 91 days or, if there are eligible children, 182 days.  This is followed by the Forces Family Pension (FFP) of 50% of your pension entitlement.  If you are under age 55, all Pension Increases (PIs) that occurred between your exit date and your date of death are added before the calculation is made.  PIs are based on the Consumer Price Index.

If your pension is not in payment, your they will receive 50% of your PP (including PIs) and your AFPS 75 PP lump sum.

AFPS 75 points to remember:

  • If you have commuted, the FFP calculation is made as if you had not.
  • If you leave with an AFPS 75 pension in payment and die within 1 year, your estate will receive the difference between the death-in-service lump sum (three times pay) and the lump sums received (so, the pension lump sum and any commutation lump sum).

Turning now to AFPS 05 and AFPS 15 benefits, adult dependants normally receive 62.5% of the member’s pension entitlement.  Those eligible comprise spouse, civil partner or ‘eligible partner’ and all are treated the same.

An ‘eligible partner’ is someone who is cohabiting with the member (both must be single) and can demonstrate financial dependence or interdependence.  Veterans UK will ask for evidence to establish entitlement,  such as:

  • a joint bank account,
  • joint ownership of property, or
  • evidence of bill sharing.

You may wish to nominate your partner to receive any lump sum payable in the event of your death, although you do not have to. The form, AFPS Form 2, is available on JPA or your browser.  Nomination would demonstrate your commitment to support your partner financially should the worst happen, and help Veterans UK with their eligibility enquiries.  HOWEVER, whoever you nominate, you must keep your nomination up to date or the wrong person may receive any lump sums due!   

If you are leaving with an AFPS 05 PP, your pension lump sum will be paid to your nominee(s).  If you are leaving with an AFPS 15 DP, a lump sum of three times your pension is payable  to your nominee(s).  If you have not nominated, your spouse, civil partner or ‘eligible partner’ will receive any lump sums due.

AFPS 05/AFPS 15 points to remember:

  • If your spouse, civil partner or eligible partner is more than 12 years younger than you, there will normally be a reduction in their pension of either 2.5% for each complete year beyond the 12 year age difference or 50%, whichever is the lower. 
  • If you had more than 37.33 years’ pensionable service the AFPS 05 pension is 62.5% of their pension will be based on 37.33 years’ service.  
  • If you die within 5 years of receiving your pension, the balance between 5 years pension and how much you have received will be paid to your estate.
  • AFPS 15 does not feature an automatic lump sum but pension may be surrender to produce one.  Rule of thumb £1 surrender gives a £12 tax free lump sum.  The maximum lump sum is 25% of the value of the pension pot.

The majority of you will have benefits from more than one scheme because you were transferred to AFPS 15 on 1 April 2015.  This means that, in the event of your death, your spouse, civil partner or partner could have benefits from more than one scheme.  Let’s look at an example:

Andy Smith leaves the Army on 31 March 2019 with an AFPS 75 PP of £5,940.80, an AFPS 75 PP lump sum of £17,822.40 and an AFPS 15 DP of £3,900.  He dies 5 years later and his benefits are then worth £6,430.51,  £19,291.53 and £4,221. 48 respectively.  If he had a spouse or civil partner they would receive his AFPS 75 lump sum of £19,291.53, an AFPS 75 pension of £3,215,25 and an AFPS 15 pension of £2,638.42.  An AFPS 15 lump sum would go to his nominee(s).  If , instead, his relationship was with an ‘eligible partner’ he or she would receive nothing from AFPS 75 and a pension of £2,638.42 from AFPS 15.  AFPS 15 would pay a lump sum to his nominee(s).  The AFPS 75 lump sum would be paid to his eligible children or, if he had none, to his estate.

The picture is complicated by the fact that there are currently three Armed Forces Pension Schemes (AFPSs).  AFPS 75 closed to new members on 5 April 2005 when AFPS 05 was introduced.  AFPS 05 closed to new members on 31 March 2015.  AFPS 75 or AFPS 05 members who were age 48 or over on 1 April 2015, remained in those schemes but most of you were transferred to AFPS 15 on 1 April 2015 so will have entitlements from both your new scheme and your old.     

Looking first at AFPS 75, adult dependants benefits are limited to spouse and civil partner, and their treatment depends upon whether or not your pension is in payment.

If  you leave and die with your pension in payment, your spouse or civil partner will receive a Short Term Family Pension equal to the pension in payment on the date of  your death, payable for 91 days or, if there are eligible children, 182 days.  This is followed by the Forces Family Pension (FFP) of 50% of your pension entitlement.  If you are under age 55, all Pension Increases (PIs) that occurred between your exit date and your date of death are added before the calculation is made.  PIs are based on the Consumer Price Index.

If your pension is not in payment, your they will receive 50% of your PP (including PIs) and your AFPS 75 PP lump sum.

AFPS 75 points to remember:

  • If you have commuted, the FFP calculation is made as if you had not.
  • If you leave with an AFPS 75 pension in payment and die within 1 year, your estate will receive the difference between the death-in-service lump sum (three times pay) and the lump sums received (so, the pension lump sum and any commutation lump sum).

Turning now to AFPS 05 and AFPS 15 benefits, adult dependants normally receive 62.5% of the member’s pension entitlement.  Those eligible comprise spouse, civil partner or ‘eligible partner’ and all are treated the same.

An ‘eligible partner’ is someone who is cohabiting with the member (both must be single) and can demonstrate financial dependence or interdependence.  Veterans UK will ask for evidence to establish entitlement,  such as:

  • a joint bank account,
  • joint ownership of property, or
  • evidence of bill sharing.

You may wish to nominate your partner to receive any lump sum payable in the event of your death, although you do not have to. The form, AFPS Form 2, is available on JPA or your browser.  Nomination would demonstrate your commitment to support your partner financially should the worst happen, and help Veterans UK with their eligibility enquiries.  HOWEVER, whoever you nominate, you must keep your nomination up to date or the wrong person may receive any lump sums due!   

If you are leaving with an AFPS 05 PP, your pension lump sum will be paid to your nominee(s).  If you are leaving with an AFPS 15 DP, a lump sum of three times your pension is payable  to your nominee(s).  If you have not nominated, your spouse, civil partner or ‘eligible partner’ will receive any lump sums due.

AFPS 05/AFPS 15 points to remember:

  • If your spouse, civil partner or eligible partner is more than 12 years younger than you, there will normally be a reduction in their pension of either 2.5% for each complete year beyond the 12 year age difference or 50%, whichever is the lower. 
  • If you had more than 37.33 years’ pensionable service the AFPS 05 pension is 62.5% of their pension will be based on 37.33 years’ service.  
  • If you die within 5 years of receiving your pension, the balance between 5 years pension and how much you have received will be paid to your estate.
  • AFPS 15 does not feature an automatic lump sum but pension may be surrender to produce one.  Rule of thumb £1 surrender gives a £12 tax free lump sum.  The maximum lump sum is 25% of the value of the pension pot.

The majority of you will have benefits from more than one scheme because you were transferred to AFPS 15 on 1 April 2015.  This means that, in the event of your death, your spouse, civil partner or partner could have benefits from more than one scheme.  Let’s look at an example:

Andy Smith leaves the Army on 31 March 2019 with an AFPS 75 PP of £5,940.80, an AFPS 75 PP lump sum of £17,822.40 and an AFPS 15 DP of £3,900.  He dies 5 years later and his benefits are then worth £6,430.51,  £19,291.53 and £4,221. 48 respectively.  If he had a spouse or civil partner they would receive his AFPS 75 lump sum of £19,291.53, an AFPS 75 pension of £3,215,25 and an AFPS 15 pension of £2,638.42.  An AFPS 15 lump sum would go to his nominee(s).  If , instead, his relationship was with an ‘eligible partner’ he or she would receive nothing from AFPS 75 and a pension of £2,638.42 from AFPS 15.  AFPS 15 would pay a lump sum to his nominee(s).  The AFPS 75 lump sum would be paid to his eligible children or, if he had none, to his estate.

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