As promised, we’re back with the third series of Question of the Week, when each week one of the team will give you an insight into the types of pension questions which come their way.
Let’s kick off with this one from David Roberts our Head of Pensions
Question:
I am currently on AFPS 15 with protected rights under AFPS 75. What are the rules around abatement of my pension when taking up a Full Time Reserve Service (FTRS) role? How will this affect my pension and lump sum?
Answer:
When you leave Regular service you will receive your ’75 scheme pension, however, it may be abated. If your ’75 scheme pension and FTRS salary combined exceed your final Regular salary, your ’75 scheme pension will be abated until your combined ’75 scheme pension and FTRS salary equal your final Regular salary.
You will keep your full ’75 scheme terminal grant (lump sum) and you don’t need a break between Regular service and FTRS to do so. You also still have the option to take resettlement commutation (’75 scheme only) to increase your tax-free lump sum. By opting for resettlement commutation, you agree to receive a lower ’75 scheme pension until age 55. The difference between the full value of your ’75 scheme pension and the reduced ’75 scheme pension is called the ‘commutation repayment’ figure. This commutation repayment figure will be deducted from your ’75 scheme pension after the abatement calculation is carried out. If there are insufficient funds left after abatement, then the commutation repayment will be taken from your FTRS salary after tax has been calculated and deducted. Once you leave FTRS, your ’75 scheme pension will return to its full value.
Regarding AFPS 15, you will keep your full tax-free Early Departure Payment (EDP) lump sum and will continue to receive your EDP income stream whilst in FTRS. You will remain an active member of AFPS 15 whilst in FTRS and will therefore continue to accrue benefits towards your ’15 scheme pension. Please note that when you leave FTRS your EDP income stream will not be readjusted. If you remain in FTRS until age 60, you will qualify for your full ’15 scheme pension on discharge, rather than waiting until State Pension Age (SPA), and your ’15 scheme EDP income stream will be stopped. If you leave FTRS prior to age 60, your ’15 scheme pension will remain deferred until your SPA and your ’15 scheme EDP income stream will continue to be paid until you reach SPA.
