You may be considering the prospect of Civvy Street and getting confused about terminal benefits – with the majority of Service personnel having been transferred to AFPS 15 with protected rights in their ‘old’ scheme, this confusion is understandable. Sometimes an ill-timed departure decision can result in a valuable benefit being narrowly missed out on.
In this short article written for Homeport Magazine we set out the basics on what is payable when for those transferred to AFPS15.
The article is written against the backdrop of the recent Court of Appeal judgement following a successful challenge by the Judges and Firefighters to the transitional arrangements that accompanied their new 2015 pension schemes. The government has accepted that the judgement will read across to other public sector pension schemes, including AFPS15, but resolving this issue will take some time. This article, therefore, describes the situation at the time of writing and our advice is to plan on your current position as you know it.
Looking at former AFPS 75 members first:
Officers’ reckonable service (RS) counts from age 21 and, to qualify for an Immediate Pension (IP) they need 16 years RS. If they leave before IP but having given 9 or more years RS, they qualify for a Resettlement Grant (RG). For Officers the current AFPS 75 RG is £16,272 which increases in line with the annual pay award.
For Other Ranks (ORs) RS counts from age 18 and, to qualify for IP they need 22 years RS. If they leave before IP but having given 12 or more years RS, they qualify for an RG. The current AFPS 75 RG for ORs is £11,121 which increases in line with the annual pay award.
Those who leave before IP receive a Preserved Pension (PP) to be claimed at age 60 for benefits earned up to and including 5 April 2006 and age 65 for benefits earned after that date. The part payable at age 65 may be claimed at age 60 – but at a reduced rate (this is called an actuarial reduction).
AFPS 15 benefits comprise:
A Deferred Pension (DP) to be claimed at state pension age (SPA) for personnel leaving before age 60 plus Early Departure Payments (EDP) for those who give at least 20 years’ service and are at least age 40 on discharge (the 20/40 Point). EDP benefits comprise a lump sum worth 2.25 times the AFPS 15 pension and an annual income of at least 34% (increasing for each year of service beyond the 20/40 point) of the AFPS 15 pension payable until SPA. The DP may be claimed as early as age 55 with actuarial reductions and, where EDP benefits are in payment, they will not be affected.
The table below illustrates this AFPS 75/15 information:
Turning now to AFPS 05 members:
AFPS 05 awards a PP, to be claimed at age 65, to those leaving before age 55 plus EDP benefits for those who give at least 18 years service and are at least age 40 on discharge (the 18/40 Point) – EDP benefits comprise a one-off lump sum worth 3 times the AFPS 05 pension and an annual income of at least 50% of the AFPS 05 pension, payable until age 65. The PP may be claimed as early as age 55 with actuarial reductions and, where EDP income is in payment, this will not be affected.
Those leaving before the 18/40 Point with more than 12 years service qualify for an AFPS 05 RG currently worth £11,423 (irrespective of rank) which increases in line with the annual pay award.
The table below illustrates this AFPS 05/15 information:
These ‘at-a-glance’ benefit tables should help you and your family avoid missing out on valuable terminal benefits. Our Pensions Team often helps members establish when is the ‘best time’ for them to leave the Armed Forces and could do the same for you.
Author Mary Petley and written for the Spring issue of Homeport