Armed Forces Pension Scheme 2015 (AFPS 15)
When the coalition government came to power in 2010, it commission Lord Hutton to conduct a review of Public Sector pension schemes. The aim of this review was to save money. Nevertheless, Lord Hutton consulted widely and although his review led to new pension schemes being introduced across the public sector, the various schemes remain very different, reflecting the different natures, circumstances and terms of service of the professions involved. The new Armed Forces Scheme introduced as a result of the Hutton Report took effect from 1 April 2015. Its main features are:
- Non-contributory & defined benefit (but career average rather than final salary) scheme.
- All personnel will be transferred onto the new scheme except those born before 1 Apr 67 who will remain on their existing scheme
- Pension rights accrued for those who were on AFPS 75 or AFPS 05 are protected are protected, including Immediate Pension, EDP and Commutation and will be paid out when expected. These benefits will be valued at salary and rank on exit from the Armed Forces.
- One scheme for all – including Reservists who become pensionable for the first time.
- A pension accrual rate of 1/47th for all.
- Normal pension age of 60 but the pension can be taken earlier (from 55).
- Deferred Pension (previously known as the Preserved Pension) linked to the individual’s State Pension Age
- Early Departure Payment Scheme for those with 20 years’ service and aged 40 (both not either or)
- No ‘automatic’ lump sum after full career but can generate by commuting pension income.
- Dependant’s pensions, Ill-Health Pensions and Death-in-Service benefits in line with AFPS 05 provisions
- A break of five years or less will be treated as continuous service after retirement.
- There is no limit on the number of years pension benefits can be accrued unlike the 34 years of AFPS 75 and the 40 Years for AFPS 05
Those who were serving before April 2015 will have a combination of benefits, those accrued under their earlier scheme and those under AFPS 15.
Although AFPS 15 was designed to save money it remains one of the best schemes in the public sector.