We receive multiple enquiries from our members requesting clarification on why they have received a revised pension award notification letter several months after leaving the Armed Forces.
In many cases, this letter relates to the pension award being revised after the point of discharge due to the annual pay award being delayed. If the annual pay award is delayed in any particular year and you are eligible for immediate pension benefits on exit from the Armed Forces, those benefits will be calculated with the pension codes and salary details related to the previous financial year.
Whilst a member of the AFPS 75 is in service, the pension codes on which the pension calculations are based increase by the same percentage as any pay award given on 1 April. Therefore, when the pay award is delayed, the pension is calculated using the previous year’s codes. When the pay award is subsequently announced, those who left service in the period between 1st April and when the pay award is implemented should expect their AFPS 75 pension to be uplifted to the value of the new pension code.
The AFPS 05 pension benefits are based on final salary which is defined as the highest pensionable earnings received over 365 consecutive days of pay within the final 3 years of service. As the pay award may affect this final salary, the pension benefits under AFPS 05 may be revised accordingly.
The AFPS 15 pension benefits are also salary-based, and therefore a delayed pay award may also affect these benefits which would result in them being revised.
Once the figures have been revised, affected members should expect to receive an additional tax-free lump sum, an increased annual income, and a back payment covering the period from discharge to when the benefits are revised. These should be included in the revised award letter.
