In this article we examine the AFPS 05 and AFPS 15 nomination provisions and sound a note of caution.
Most of you will have benefits in either AFPS 05 or AFPS 15 (or both), and those schemes give you the opportunity to nominate who should receive any pension lump sums due in the event of your death.
Why have we left AFPS 75 out of all this? Well, AFPS 75 specifies exactly who is eligible to receive any death-in-service (DIS) lump sum or any other pension lump sum due in the event of the member’s death – so no nomination is needed or, indeed, possible. Both AFPS 05 and AFPS 15 do allow the member to nominate one or more people or organisations to receive any lump sums payable on the member’s death. This is not the same as nominating the recipient of the dependant’s pension itself – none of the schemes require you to do that, as the scheme rules are specific about who is eligible.
Nominations must be made on an AFPS Form 2 and, if more than one person or organisation is nominated, how the sum is to be divided must be specified. Should the member die in service, the sums involved are significant. Whereas the AFPS 75 DIS lump sum is normally three times the representative rate of pay for the deceased’s rank, the AFPS 05 and AFPS 15 DIS lump sum is normally four times pensionable pay. I use the word ‘normally’ advisedly as, where there are other pensions in payment or preserved/deferred benefits related to Armed Forces service, the sum can be less. Assuming no other pension benefits need to be taken into account, the AFPS 05 or AFPS 15 DIS lump sum for a corporal would be between £120,000 and £140,000 – which is a serious sum of money in anyone’s terms.
Nominations are intended to make the member’s wishes clear and, where one exists, Veterans UK can arrange swift payment to the nominee(s). AFPS 05 and AFPS 15 specify that adult pensions are payable to spouse, civil partner or ‘eligible’ partner. The ‘eligible’ partner can be a same sex or a heterosexual partner, but both parties must be unmarried. The ‘eligible’ partner must live with the member and be financially dependent on or interdependent with him or her. Completion of an AFPS Form 2 is particularly helpful in the case of ‘eligible’ partners, because Veterans UK will be looking for evidence of financial dependence or interdependence in order to establish the partner’s entitlement to a pension. A nomination provides some evidence of the member’s intention to provide for his or her partner’s financial wellbeing and, as such, can assist Veterans UK in reaching a speedy conclusion. If there is no nomination, the lump sum will eventually go to the spouse or civil partner, or ‘eligible’ partner or, failing that, to the estate. The existence of an AFPS Form 2 can speed things up and, at a time when the family have worries aplenty, that could mean that immediate money problems do not add to the mix .
Once you leave the Armed Forces, there may be pension lump sums due. For example, AFPS 05 awards the member a pension which includes an automatic pension lump sum (worth three times the pension). If the member leaves at age 55 or over, the lump sum is paid to the member but, if he or she leaves before that age (as most AFPS 05 members will), and dies with an unclaimed preserved pension, the pension lump sum is payable to the nominee(s).
AFPS 15 does not provide an automatic pension lump sum. AFPS 15 members who leave before age 60 receive a deferred pension and, although there is no automatic AFPS 15 pension lump sum, if the member dies before claiming his or her deferred pension, a lump sum of three times the pension is paid to the nominee or split between nominees where more than one person or organisation was nominated.
Where an individual was an AFPS 05 member who was transferred to AFPS 15, there could be more than one lump sum payable.
Tommy joined the Armed Forces on 1 April 2006 and leaves on 1 April 2020 with a final pensionable salary of £34,000:
His preserved AFPS 05 pension would be £4,371.43 lump sum would be £13,114.29; and
His deferred AFPS 15 pension is £3,600.
Let’s say Tommy died on 5 November 2020, so, before drawing these pensions, the AFPS 05 pension lump sum of £13,114.29 and three times the AFPS 15 deferred pension (so, £10,800) would become payable. That gives a total of £23,914.29 - again, a not insignificant sum. Note, these figures are at 2020/21 prices, and deferred and preserved pensions increase in value each April by Consumer Price Index.
The AFPS Form 2 is available online. It is simple to complete and there is nothing to prevent you from replacing an old nomination form with a new one, even after you leave the Armed Forces.
In principle it is good that AFPS 05 and AFPS 15 members have a vehicle for making their wishes known regarding who will receive what can be significant sums of money. However, we have seen instances where things have not panned out as expected because the nomination has not been kept up to date. Veterans UK cannot second guess your wishes and will respect the contents of the nomination form unless it has lapsed.
A nomination will only lapse if:
- The nominee dies before the member;
- The nominee is the member’s spouse or civil partner and the relationship is legally dissolved. The member may re-nominate the ‘ex’ after the decree absolute, should they so wish;
- On marriages or civil partnerships that take place on or after 1 December 2018. If your marriage pre-dates the change, you must check that any existing nomination reflect the family’s current needs.
- The nominee is convicted of the murder or manslaughter of the member (and potentially any other offences relating to the nominee killing or wounding of a member, depending on circumstances).
In every other circumstance they remain valid unless you change them. So, if your personal circumstances have changed – especially if you live with someone other than the original nominee you must review your nomination form. If you don’t the wrong person may get your lump sum – and this could certainly add to the bereaved family’s upset.
The message from this article is that it is may be a good idea to express your wishes on an AFPS Form 2 – this will depend on your particular circumstances and intentions - but it is not mandatory and if you are a forgetful type it may not suit you. If you do nominate, you really must keep your nomination up to date.
If you are a member of the Forces Pension Society and have questions on this or any other pension issue, contact us at firstname.lastname@example.org. If you are not a member but would like to know more about us, visit https://forcespensionsociety.org/join-now/
Author: Mary Petley, 23 October 2020 (for November Pathfinder magazine)