The Haythornthwaite Review into Armed Forces Incentivisation (HRAFI) was published on 19 June and can be read in full here: Agency and Agility: Incentivising people in a new era
Text relating specifically to the Armed Forces Pension Scheme (AFPS) can be found on pages 55-56 (Para 2.34 – 2.38). The MoD is now studying the report and will respond formally in due course.
In a written statement, Minister for Defence Personnel and Veterans, Dr Andrew Murrison acknowledged the report’s 67 recommendations were “wide ranging” and that
“They provide a potential roadmap out to the 2030s aimed at improving the proposition to those who serve now, and those who may consider serving in the future.”
We were consulted and submitted our formal policy position to the review team based on the 5 pillars of the AFPS we adopted in 2021 and which can be found here: Armed Forces Pension Scheme: what matters to us (and therefore you!)
The review has not made any specific recommendations for changes to the AFPS now, instead identifying areas judged worthy of further examination. Recommendation No 23 (the only one relating to the AFPS specifically) reads:
Take a number of steps to increase the value and efficacy of the Armed Forces pension. Create a pension value statement, revive previous work on allowing payments of the Early Departure Payment to be replaced by an alternative in-service payment scheme that will deliver better incentivisation effect, examine a pay in lieu of pension scheme and pension recycling, and examine options to reform SCAPE.
(SCAPE is a technical formula used to calculate overall pension costs to the MoD: Superannuation Contributions Adjusted for Past Experience).
The review also made clear that improving individual awareness / understanding of the benefits of the AFPS needs to improve as part of a comprehensive ‘People Value Proposition’ (an idea based on so-called ‘employee value propositions’ used in the private sector). We agree that effective communications are key which is why we apply so much effort to our pension communications!
At this stage we are also studying the report’s findings and will engage directly with the MoD on any further work they decide to undertake which could affect the AFPS.
We will keep you posted…
