In April 2022 Pathfinder magazine, we explained how invaliding benefits work for former AFPS 75 members (subject to Transitional Protection under the McCloud remedy) who transitioned to AFPS 15 on 1 April 2022.
For members of AFPS15 who transitioned from AFPS 75, ill-health awards will be based proportionately on time served within AFPS 15 and time served as a member of AFPS 75. The proportion of time spent in each Scheme will be calculated in accordance with the respective Scheme rules.
The AFPS 75 entitlement is paid immediately on discharge and the award will include a tax-free lump sum worth three times the pension. The pensions, which are index-linked from the outset, are calculated based on the individual’s rank for pension at the date of their medical discharge, their length of Reckonable Service in AFPS 75 and the Pension Code in force on the date of discharge. The pension includes an enhancement for the fact that the discharge is a medical one.
AFPS 15 allocates the invaliding condition to one of three Tiers depending on the severity of the medical condition:
- Tier 1 – the condition is deemed not to significantly impair the individual’s capacity for civilian work.
- Tier 2 – the condition is deemed to significantly impair the individual’s capacity for civilian work.
- Tier 3 – the condition is deemed to prevent further full-time work.
Under a Tier 1 discharge, an individual will be awarded a tax-free lump sum. However, if they have passed the point at which they become eligible for an Early Departure Payment (EDP) (i.e. they have served for a minimum of 20 years and are at least 40 years old – both criteria need to be met), the member will receive an EDP lump sum and monthly income payments instead. They will also be awarded a deferred pension, which will come into payment at State Pension Age, but which may be claimed at any point from age 55 at an actuarially reduced rate.
Under a Tier 2 or Tier 3 discharge, the member will receive an enhanced taxable ill-health pension paid for life. If they have passed the point at which they qualify for an EDP or another form of AFPS 15 pension, they will receive a Tier 2 or Tier 3 award instead because the award is more generous.
The article provides the framework for how ill-health benefits are calculated under each Scheme, with worked examples. You can view the article here.
Next time we cover Invaliding Benefits from both AFPS 05 and AFPS 15 – you can read it here