Abatement is the reduction of your Armed Forces pension benefits which may occur if you re-join into Regular or Reserve service with a pension in payment. Your pension may be partly or fully abated, depending on the circumstances that are assessed at the point of re-joining.
The abatement rule states that if the value of the pension combined with the new service salary exceeds the final salary from the previous period of Regular service, then the pension is abated to ensure that the value of the final Regular salary is not exceeded. If a break has occurred between the pension coming into payment and re-joining, the final Regular salary is adjusted for inflation before the assessment is conducted.
The table below details the type of pension in payment that would be subject to abatement
| Pension in payment | Subject to Abatement |
| AFPS 75 | Yes |
| AFPS 05 | Yes |
| RFPS 05 | Yes |
| FTRS 97 | Yes |
| NRPS | No |
| AFPS 15 | No |
This article focusses specifically on the effect of re-joining the Armed Forces with AFPS 05 benefits in payment. After leaving Regular service, you may be in receipt of either an AFPS 05 Early Departure Payment (EDP) or the AFPS 05 pension, and it is important to understand the difference between them when considering rejoining.
AFPS 05 Pension
If you have left Regular service and are in receipt of an AFPS 05 pension (normally after retirement at age 55 or over), and re-join any form of service (Regular, PTVR, ADC, VeRR or FTRS) then the pension is subject to the abatement rule. It is less likely that abatement would occur if re-joining into PTVR service, ADC, or VeRR as the salary earned under those contracts is not usually high enough to trigger abatement. However, re-joining Regular service or FTRS means the likelihood of abatement is higher. Abatement only affects the annual pension income. The tax-free lump sum paid when the pension commences is safe and does not need to be repaid.
It is essential to understand that if the pension is abated, then the amount it is reduced by is essentially ‘lost’. The full value of the annual pension is only restored when you leave your next period of service, but the abated portion is not repaid or added in any way to the value of the pension.
AFPS 05 EDP
If you are a member of the AFPS 05 and have completed 18 years of Regular service and reached 40 years of age at the point of discharge (but are under 55 years old), you will qualify for the AFPS 05 EDP package. This consists of a tax-free lump sum and an annual taxable income which is paid from discharge up until 65 years of age when the EDP income stops and the deferred AFPS 05 pension is payable.
If you have left Regular service and are in receipt of an AFPS 05 EDP, the effect of re-joining is very different compared to what happens if you are in receipt of a pension. However, not all forms of new service have an effect. If you re-join Regular service, FTRS or the Reserves on an ADC contract, then the annual EDP income would cease in its entirety. There is not an abatement assessment in the same way as there is with the pension. Instead, the entirety of the annual EDP income simply stops being paid. Re-joining into PTVR service or VeRR does not have any effect on the EDP benefits, and they remain in full payment (including the EDP lump sum), even if there is no break between the periods of service.
Annual EDP Income
The annual EDP income will only resume when you leave the further period of service. Any EDP that was not paid during this recent period will be ‘lost’ and not repaid. If you are aged over 55 at the point of discharge from the further period of service, then the AFPS 05 pension would be payable rather than the EDP income. If your second period of service is as a Regular, then the AFPS 05 EDP may be adjusted to account for the second period assuming you are under 55 years of age on exit.
EDP Lump Sum
There is also the AFPS 05 EDP lump sum to consider. The rule states that the ‘unexpired portion’ of the EDP lump sum needs to be repaid upon re-joining service (apart from PTVR service). The assessment of the ‘unexpired portion’ is based on the time it would take to ‘earn’ the lump sum based on the final Regular salary. As an example, if the EDP lump sum was £50,000, and the final Regular salary was £50,000, then a break of one year would be required to retain the full lump sum. If you were to re-join within six months, then £25,000 of the lump sum would need to be repaid. If you were to re-join without a break, then the full lump sum would need to be refunded.
Further service can be a very attractive prospect, particularly when considering that all forms of service now attract pension accruals under the AFPS 15. However, careful consideration needs to be given to the potential pitfalls, particularly if you are in receipt of an AFPS 05 EDP.
We can of course provide individual guidance to our members to ensure you are fully aware of all the considerations required upon re-joining.
Members can also find further information on Reserve Forces and Pension Benefits in our Factsheet which is located in the Members area
Information correct at time of publication 18 December 2024
