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Advice & Guides

Pension Enquiry TOP10

For Pensions Awareness Week. An example of the Members pension questions we receive, helping you better understand your pension. Here's one on Medical Discharge

Question:

I'm being medically discharged, can I choose to leave anyway?

Answer:

Generally not, the decision is made according to a process contained in PAP 10 and the medical board will decide if you are going to be medically discharged and for AFPS05 and AFPS15 the Tier it will be under.

The payments are progressive as they are in effect compensation for a lost career and may be compensating for reduced post service employment opportunities.

It varies from a lump sum on departure for those under the qualifying time for Early departure payments under Tier one with a preserved Pension to Pensions, Lump sums under AFPS05 and the opportunity to Commute part of the 2015 Pension to create a Tax free lump sum under Tier 2 and 3.

Under the AFPS75 scheme there is a more flat award system for working out a Service Invaliding Pension (SIP) which is again a balance of service completed and lost future service.

There are two important things which affect the payments. One is attributality. Is the career ending injury caused by Military service?

If it is judged so under the AFPS75 then a percentage degree of Service attributable pension (SAP) is calculated. If this ends up less that the SIP then the SIP figure is used and called a SAP. This will mean it can be assessed by HMRC to ascertain if it can be made Tax free.

Tier 2 and 3 on the AFPS 2015 are usually assessed for attributably by HMRC automatically.

The decision of HMRC can take a bit of time to be applied but if you get it, it is backdated. If your pension isn’t considered as Attributal to service then Income tax is applied to it. The tax free status of Medical pensions does not cover other salary or income, just those payments.

An interesting point in the AFPS05/AFPS2015 schemes is if you had already completed the required time to earn early departure benefit payments then you will obtain those benefits.

It’s a very complicated subject- and I must point out that in PAP 10 there is an appeal process if you think you’ve been awarded the wrong Tier.

Neil Knowles, Pension Adviser

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