For Pensions Awareness Week – an example of the pension questions we receive, helping you better understand your pension. Here’s one on the most popular topic – rejoining.
If you leave regular service and re-join more than five years later, then for pension purposes you will be treated as a complete new-joiner. This means that your previous service will not count towards any pension benefit entitlements (resettlement grant or EDP 15). You will also have to ‘vest’ in the pension scheme again ie you will have to serve at least two calendar years from your re-joining date before you become eligible for any pension benefits. If your previous service earned you deferred pension benefits, these will remain deferred and your new service will start earning you pension benefits from scratch.
The answers to the question below are all taken from the perspective of a break in service of less than five years.
Do I have to pay back my pension of I rejoin?
If you left with your AFPS 75 pension in payment, you do not have to pay it back if you re-join regular service or the reserves. You get to keep all of your lump sum but your pension income may be abated (reduced). This is because of a Treasury rule that states that your salary (on re-joining) and your AFPS 75 pension award before any form of deduction is made for commutation, when added together, are not allowed to be a sum greater than your salary on your last day of regular service. If your salary + AFPS 75 pension are greater than your (inflation adjusted) previous final salary, then your AFPS 75 pension is abated downward until both figures are the same. In addition to this, if you took AFPS 75 resettlement commutation, you will still need to make the commutation repayments and this figure is deducted from your remaining pension in payment, if there is enough left after the abatement calculations. If, after the abatement calculations, you do not have enough pension left to make your commutation repayments, then they are deducted from your salary.
EDP 05 in Payment
Remember EDPs are not pensions.
If you left and were receiving EDP payments from AFPS 05, your EDP 05 income stream will stop and part of your EDP 05 lump sum will have to be paid back, depending on how long you have been out of service. If, for example, the value of your EDP 05 lump sum was equivalent to a year’s pay and you have had a break of 6 months, then you will have to repay half your EDP 05 lump sum.
If you re-join regular service your EDP 05 income will re-start when you leave the second time, as long as your AFPS 05 pension is not due to come into payment immediately. Your EDP lump sum and income stream will be re-calculated and you will receive both (the lump sum minus the amount already received). If the re-calculated EDPs are less that your original ones, the original ones are reinstated.
If you re-join the reserves, you will have to repay your EDP 05 lump sum (as above) and your EDP 05 income will stop. You will not receive another EDP 05 lump sum when you leave the second time and your EPD 05 income stream will re-start as it was being paid previously.
EDP 15 in Payment
Remember EDPs are not pensions.
If you left and were receiving EDP payments from AFPS 15 and you re-join regular service you have a choice of what you can do:
- You can keep your EDP 15 income and EDP 15 lump sum. If you do this your EDP will not increase during your next period of service but your AFPS 15 deferred pension will continue to grow.
- You can choose to stop your EDP 15 income and re-pay the ‘unexpired’ portion of your EDP 15 lump sum and your EDPs will be re-calculated when you leave service the second time, to reflect the additional service, as long as you leave before age 60. If you are still serving at age 60, you will not receive EDPs when you leave because your AFPS 15 pension will come into payment immediately.
If you re-join regular service with an AFPS 75 pension in payment, your previous service does not count towards qualification for EDP 15.
If you re-join as a reservist, then you get to keep your EDP 15 income and lump sum and your reserve service will continue to grow your AFPS 15 deferred pension but reserve service does not increase the value of your AFPS 15 EDPs.
If you left with a resettlement grant, you will need to have had a gap of at least 31 days in order to keep your resettlement grant.
Alisa Lakeman-Ford, Pension Adviser