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What’s The Difference between Armed Forces Occupational Pensions and other Armed Forces Pensions?

We have been asked to provide a short resume to explain the difference between different sorts of Armed Forces pensions – as there is confusion amongst some of you – especially those seeking to claim free bus passes/oyster cards and amongst some expats living abroad seeking a waiver the cost of NHS treatment. Confusion abounds because different organisations have different rules concerning entitlements of veterans – and the word veterans is used freely in different contexts. As a rule of thumb, many private organisations offer discounts to veterans (ie anyone who has served) – usually as a simple marketing exercise – and such discounts are not tied to your pension; you simply need to be able to prove your status. However several public sector / state concessions are linked to your pension status – which usually means that you must be in receipt of a war pension or Armed Forces Compensation Scheme (AFCS) payments. Transport for London Oystercard is an example. What TFL confusingly calls a 'Veterans Oystercard’ is not - it is only available to war pensioners/AFCS recipients or their widows/dependants. The explanation below should help if you are in any doubt about your status. In brief:
  •  Occupational Pensions. Your occupational pension is the one that you are entitled to automatically by virtue of your job. Today, any member of the Armed Forces is entitled to a pension once they have completed a two year ‘vesting period’ (although historically this has not always been the case), but when you are entitled to receive it will depend on how long you served and when you left. The ‘normal’ pension received by virtue of AFPS 75, AFPS 05 or AFPS15 are all occupational pensions and does not attract special treatment such as free Oystercards.
  • War Pensions. War pensions were awarded for those injured in the course of their duty before 6 April 2005. These injuries did not have to be sustained in action, although they very often were. War pensions are tax free. If such pensions are in regular payment (as opposed to a one off lump sum) they do often attract additional privileges (such as free travel).
  • Armed Forces Compensation Scheme. This was introduced in 2006 to replace war pensions. It does exactly the same job, but works in a different way and under a different name - for injuries sustained after 6 April 2006. It too is tax free and attracts privileges in the same way as a war pension.
  • Armed Forces Widows (including spouses/partners) Pensions. These come in two different forms:

1. Occupational. This is the pension a widow or partner may be eligible to receive if their spouse dies. It is likely to be a 50% pension under AFPS 75 and about 62% under AFPS 05 or 15 and has no special additional privileges attached to it.

2. War Widows /AFCS spouses/partners. These are those whose spouses were killed in the course of their duty. They are eligible for a separate pension in addition to any occupational pension they may receive from their spouse’s service. Such pensions are treated in the same way as war pensions/AFCS pensions.

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