In the May 2022 issue of Pathfinder we set out how ill-health benefits would be worked out for those transferring from AFPS 75 to AFPS 15 on 1 April 2022. In this article we explain how invaliding benefits work for former AFPS 05 members transferring to AFPS 15 for the first time (this group were previously Transitionally Protected).
To be in this group, you had to have been born before 1 April 1967 (or you would have been transferred to AFPS 15 on 1 April 2015). Thus, we re assuming that the audience for this article will be in their mid-50s – but that does not mean that they will not be invalided or that they will not need reassurance that they will receive their AFPS 05 benefits despite now being a member of AFPS 15.
First, the basics:
AFPS 05 pensions are payable immediately to those who serve up to the age of 55 and those who leave sooner receive preserved pensions (PPs) normally payable at age 65. The pension includes an automatic lump sum worth three times the pension. The AFPS 05 Early Departure Payment (EDP) Scheme pays benefits to those who leave before age 55 having completed at least 18 years relevant service and having reached at least age 40 (the 18/40 Point).
AFPS 15 pays pension immediately to those who serve up to the age of 60 and those who leave sooner receive deferred pensions (DPs) normally payable at their State Pension Age (SPA). There is no automatic lump sum, but pension may be surrendered to generate one – the rule of thumb is that £1 surrendered produces a tax-free lump sum of £12. The AFPS 15 EDP Scheme pays benefits to those who leave before age 60 having completed at least 20 years reckonable service (RS) and having reached at least age 40 (the 20/40 Point).
Both PP and DP may be claimed at/after age 55 at a reduced rate – this is called actuarial reduction.
Both schemes allocate the invaliding condition to one of three Tiers:
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.
Tier 1 benefits are based on 1/8th of Final Pensionable Pay (FPP) for AFPS 05 or Final Pensionable Earnings (FPE) for AFPS 15 for each year of relevant service (for AFPS 05) or RS (for AFPS 15), subject to a minimum of 6 months’ pay and a maximum of 2 years’ pay. For AFPS 15, FPE is exactly as it sounds – the member’s Final Pensionable Earnings. For AFPS 05, FPP is the best 365 consecutive days’ pay in the last three years, with earlier years figures increased by CPI if that gives a greater value than the increase from the pay award. If the member qualifies for EDP benefits, they are paid instead of Tier 1 benefits.
For Tiers 2 and 3, RS is enhanced by a proportion of prospective service to age 55 for AFPS 05 benefits or age 60 for AFPS 15 benefits. The index-linked pension is payable straight away. For Tier 2 this proportion is 1/3rd and for Tier 3 it is ½.
The allocation of the conditions to a Tier may be challenged on the grounds that:
- The original decision was incorrect; or
- The condition has deteriorated in an unexpected way.
If successful, the benefits will be recalculated and backdated to the date of discharge if the decision was incorrect, or to the date of the request for review in the case of unexpected deterioration.
If you would like to see worked examples, you can read the full article below. The first example is for someone who has reached both the 18/40 Point and the 20/40 Point: the second is then for someone who has reached the 18/40 Point only. Read in full here (page 6/7)
This is not easy stuff! If you are a member of the Forces Pension Society and have pension-related questions, email us at email@example.com. If you are not a member consider joining us here