It is a good idea to keep an eye on your pension as it grows and, in this short article written for the recent issue of RAF News we explain the tools that are available to help you with this and the difference between them.
Benefits Information Statements (BIS) were introduced in August 2015 and all serving personnel (including members of the Part Time Volunteer Reserve or PTVR) should receive a fresh BIS annually, shortly after their birthday. The idea is to provide a concise statement of your pension earnings up to the date of the BIS and offer the opportunity to identify and correct any errors you find. If you have not been receiving them or you have received one but found errors, contact your Unit Admin staff.
The BIS is a snapshot of your pension as if you were leaving service on your birthday that year and the spouse or civil partner benefits which would become payable if you were to die in service at that point. It separates the benefits clearly so that you can see which benefits result from which scheme, and when they are payable.
It does NOT show benefits transferred in from other schemes, the value of any Added Years or Added Pension purchased, or the impact of divorce-related orders on the pension.
Further, it does not mention the benefits payable for dependent children or unmarried partners. These are omitted is to keep the BIS simple. The eligibility rules for children under AFPS 75 differ so markedly from those of AFPS 05, AFPS 15 and RFPS, and AFPS 75 does not feature pensions for unmarried partners. To cover everything would make the document too complicated, and discourage the owner from reading it!
So, in a nutshell, the BIS is a useful tool, but it is a snapshot of your benefits at the time it was issued, it is not a forecast of benefits payable at an exit date in the future and should not be used for financial planning.
The Pension Calculator A handy on-line tool but its accuracy depends entirely on the data that you input and it, too, has some limitations. For example, it will assume that your rank for pension is the rank that you have told it you hold. The problem is that under AFPS 75 rules your rank for pension is:
For Other Ranks – the highest paid rank held for two years in the last five; or
For Officers – the highest substantive rank held for two years or acting rank held for three years.
Periods of more than one year of the two or three required, a proportionate uplift in the pension is applied.
The Pension Calculator cannot deal with this and will always assume that the AFPS 75 rank qualification criteria has been fulfilled. Further, it cannot deal with split service, transfers in, Added Pension, Added Years or Pension Sharing Orders.
It CAN deal with PTVR calculations but the input is extremely time-consuming and more demanding. The scheme year runs from 1 April to 31 March and you will need to enter all your Service history for each scheme year. If you change your rank, your rate of pay or the number of days worked within a scheme year, a separate Service history will be required for each change within that scheme year. BUT there are notes on the screen to help you complete the projection.
The message here is that the Pension Calculator is a terrific tool in many respects, but it is not fool proof and it comes with a disclaimer!
Formal Pension Forecast calculates your benefits using your data as held by DBS and the actual rules of the scheme or schemes in which you have accrued benefits. Everybody is entitled to one free formal pension forecast a year and to get it you must apply on an AFPS Form 12 (while still serving) or an AFPS Form 14 (once discharged). If you require the pension value for divorce purposes, you should apply using an AFPS Form 2 (CEV) – but this forecast is not free. Again, when you receive your forecast check it – errors can occur.
To summarize, you have three methods of pension monitoring available to you – the BIS annual snapshot, the on-line Pension Calculator and the formal pension forecast provided by Glasgow on request. All are useful in their own way but the most useful one to rely on for financial planning is the formal pension forecast – but even that contains a disclaimer – and none of them talk back to you.
Of course, there is a fourth method – the Forces Pension Society.
The MoD has recently provided a guide to assist members of the armed forces in how to use and understand the AFPS Calculator, and you may also find the following MoD site https://discovermybenefits.mod.gov.uk/ helpful. Discover My Benefits is a free, easy-to-use tool for Service people, their families, and anyone interested in joining the armed forces. You can use it to find out what support you could receive as a Service person