If you are leaving the Armed Forces with an AFPS 75 Immediate Pension (IP) or an AFPS 05 pension in payment, or with Early Departure Payment (EDP) benefits under AFPS 05 you need to understand the impact that further service could have on it.
Under both schemes it can be significant. In this article we explain when and why abatement of pension occurs under AFPS 75 rules. Next month’s article will look at the effect of abatement on Early Departure Payments under AFPS 05 rules. This is more complex and is covered under separate legislation, hence the separate article, but it can be equally important.
So to be clear – this article is for those who leave with an AFPS 75 immediate pension. Next month’s article deals with abatement for those who leave AFPS 05 with a pension in payment at age 55 or in receipt EDP benefits having served at least 18 years and being at least age 40 on discharge (the EDP 18/40 point).
Let’s then look at the pension abatement rules. AFPS 75 contains a rule which says that if you leave Regular service with a pension and take up a post which would entitle you to pension benefits under another Service pension scheme your pay in your new post plus your pension cannot exceed your old rate of pay (plus inflation if you have had a break in service which takes you into the next pay year or beyond) without your pension being affected. This does not mean that the new rate of pay can never be more than the old – it can… but the pension will stop. Abatement lasts only for the period of further military employment. AFPS 15 does not contain such a rule but that does not dilute the AFPS 75 rules – pensions under AFPS 75 will be abated even though your new service will be pensionable under AFPS 15. Under AFPS 75 the IP is paid after 16 years’ service from age 21 for officers or 22 years’ service from age 18 for Other Ranks (OR)– this means that the pension could be paid as early as 37 for an officer and 40 for an OR, leaving plenty of time for further military service.
Read the full article in the August issue of Pathfinder (pages 6 & 7)