You are never too young to save that bit more for retirement, so our Q&A this week relates to Added Pension
Question:
Is it worth me paying additional contributions into my ’15 scheme pension?
Answer:
If you make voluntary contributions to your ‘15 scheme pension it will provide an increased level of pension (and Early Departure Payment, providing of course you serve long enough).
If you wish to consider making voluntary contributions, you can obtain a quote easily but submitting an AFPS Form 6 to Veterans UK to see what return you will receive on your proposed contribution. The amount of pension increase quoted is guaranteed and not subject to stock market fluctuations or movement, in the way that private pensions are, so there is therefore much less risk involved. You are also locked in for only one year at a time, and you decide what you can afford to pay in – and remember, because it comes out of pay before tax, it reduces your tax liability.
The Armed Forces pension schemes, however, do not have the same ‘freedoms’ that are attached to civilian/private (Defined Contribution) schemes. In particular, you cannot cash in the entire pension or take lump sums as and when you want them once you have reached Age 55 (or beyond).
Have more questions on this topic? You might find this specific Q&A on Added Pension helpful.
Next week, we have something on commutation for you, meanwhile you can read more in this series here.
