Forces Pension Society

Fighting for the forces and their families

Representative Rates of Pay – Pensions were too low – back payments will now be paid!

November 10, 2017
Calculations

Earlier this year we spotted a significant miscalculation in the pensions paid to recently retired WO1s and equivalent, and to some other ranks. Many veterans are receiving too little pension, but this is now being remedied. Here is the story…

Some months ago, looking through the figures in one of the many cases that come our way, one of our pension advisers spotted that something was not right.

The 1975 Scheme is a ‘final salary’ scheme, but pensions calculated for service under that scheme are based not on actual final salaries but on rank, using a ‘representative rate of pay’ –  a single sum of money which applies to everyone retiring in that rank. But this means that rate must be truly ‘representative’ – it should be chosen from within the range of salaries actually being paid. But what we saw was that in 2016 for WO1s and equivalents this had not happened.

The range of salaries that WO1s  would have been earning on retirement was between £47,018 and £50,183, but the actual rate being used to calculate pensions was beneath this range at £44,877. In other words it was not representative at all. As a result, pensions were lower than they should be.

The Society took this issue immediately to the MoD, who did not need to be persuaded that a mistake had been made (caused by the Pay 16 changes) and that it had to be put right.

Since then the MoD have been busy working out the detail of a remedial package, making sure that their systems are such that this particular mistake will not happen again, and – by no means straightforward – securing the ‘new money’ that would be required to make good the underpayments.

It seems that all this has now been done, and arrangements are being made for the wrong to be put right, and back payments will be made to all those whose pensions were too low. This will take a little while to be put into place and it looks like those who were short changed – and we believe there are several hundred recently retired personnel in this category – will get an increased pension from April next year and arrears paid by September 2018.

Here is a statement from the General Secretary, John Pitt-Brooke 

“This is a great victory for the Society, all the more important because it would not have been obvious to those who were underpaid that their pension was wrong; to spot this you would have to know exactly what you are looking for, which requires the kind of expertise that the Society uniquely possesses.

We have not made a fuss while this has been sorted out because we have been confident from the outset that the MoD were taking it seriously. Indeed they have moved with impressive speed and determination to put in place the necessary recovery plan. We will remain vigilant as this plays out, to ensure that the back payments are made quickly and accurately, and of course we shall be examining representative rates of pay closely in the future, so the same thing does not go wrong again.

A significant win for us to stand alongside other wins in our history. We will continue to monitor all aspects of pensions delivery. After all, that is what our members expect us to do.”

 

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