Armed Forces Pension Scheme (AFPS)

Army Personnel
Army Pensions
Pay, Pension and Personnel Administration
Armed Forces Personnel Administration Agency
Mail Point 480, Kentigern House
65 Brown Street
Glasgow, G2 8EX
Tel: 0141 248 7890

RAF Personnel
RAF Pensions
Pay, Pension and Personnel Administration
Armed Forces Personnel Administration Agency
Building 250, RAF Innsworth
Gloucester, GL3 1EZ
Tel: 01452 712612

Website available

Armed Forces Pension Scheme Website

Contracted-out

Yes

Eligibility

Deferred joining period - No, automatic membership

Minimum age at entry - 21 for officers and 18 for other ranks

Maximum age at entry - Age 55

Contribution basis

Non-Contributory - The state pays the cost of the scheme, no direct contributions towards basic benefits are made, however the individual’s pay award is reduced to reflect the value of the pension relative to other comparable schemes

AVC scheme available - Yes

Stakeholder scheme available - Yes

Added years permitted? - Yes, by payment of AVCs

Also a transfer in payment from another pension scheme can be paid, this must be requested within 12 months of joining the scheme

Salary definition

AFPS pension benefits for members below one star (Commodore, Brigadier, Air Commodore) are not calculated on individual earnings, but on a representative rate of pay for each rank. This “all of one company” principle means that all those of the same rank with the same length of service retiring in the same year receive the same rate of pension regardless of what they earn

Pensionable service - This is referred to as reckonable service and starts from age 21 for officers and age 18 for other ranks

Final rank - This means the highest paid rank held for more than 2 years in the last 5 years of service for other ranks, and the highest rank held for 2 years or acting rank held for 3 years in the case of officers. (Special rules can apply for death and injury benefits)

Retirement benefits (otherwise known as Terminal Benefits)

Normal retirement age - Age 55 , (Age 60 for paid up members)

Pension - If member retires at age 55 with 34 years reckonable service (officers) or 37 years (other ranks) full pension is granted which amounts to 48.5% of representative pay. This pension is known as the “representative pay rate” for the rank. This is worked out using specially selected rates of military salary and does not include any extra payment made to members with special qualifications – eg. doctors, pilots etc. For officers of one-star level, (Commodore, Brigadier, Air Commodore) representative pay scales vary with years of service. At two-star level and above (Rear Admiral, Major General, Air Vice Marshal), pensions are based on pensionable earnings, not representative pay. An additional supplement applies to doctors and dentists serving after 1997

Pension - If the member has completed 16 years reckonable service as an officer or 22 years reckonable service (other ranks), when they retire they are entitled to an immediate pension, this is called the immediate pension point. This pension will be fixed until the member reaches age 55, at which point the pension will receive increases in line with the cost of living

After completing 16 years (officer) 28.5% of representative pay will have accrued

After completing 22 years (other ranks) 32% of representative pay will have accrued

If a member chooses to leave service after they have reached their immediate pension point, but before completing their commission or engagement, then premature voluntary retirement rates of pension are paid, which are lower than immediate pension rates

Retirement lump sum - A one-off tax-free lump sum of 3 times the annual pension

Ill-health early retirement (otherwise known as attributable/non-attributable benefits)

If a member’s career is cut short by illness or injury which is no fault of their own and they have completed more than 2 years service, an immediate pension and lump sum are payable

If a member is invalided out of the service and the Veterans Agency (VA) accept that the member’s medical condition is attributable (is caused or aggravated by) circumstances linked to the member’s service with the Armed Forces, then they may be entitled to a War Disablement Pension from the VA. Also, if the AFPS accepts that the member’s condition is attributable then the member may be entitled to an award under the pension scheme too, both benefits will be tax free

Retirement lump sum - If the injury/illness is not considered attributable to the member’s service and they have completed more than 2 years service, then an immediate pension plus a tax-free lump sum of 3 times the pension will be payable. The pension is based on the length of service - and when that is 5 or more years – an enhanced rate is normally payable. This benefit is payable at the discretion of the scheme administrators

Pension increases

In line with RPI (once member has reached age 55)

Death before retirement benefits

Dependant's pensions - A widow(er)’s pension of 50% of the pension the member would have received on non-attributable invaliding

Widow(er)’s pensions cannot be left by will or awarded to anyone other than the legal spouse. A spouse from who the member is separated, but not divorced, retains his/her entitlement to these benefits. A common law partner or any other person will not be eligible to receive the benefit

A short term family pension is paid in addition for the first 91 days of widow(er) hood, this is increased to 182 days if there are children. This benefit is based on daily rate of pay if death occurred in service

Orphans benefits can be paid to a legal guardian

Pensions are also payable to eligible children of up to one half of the member’s entitlement (where a widow(er)’s pension is also payable), with no one child receiving more than a quarter

Lump sum - If the member was single a tax-free lump sum will be paid to their estate

A tax-free lump sum which amounts to one years salary or the terminal grant that would have been payable on non-attributable invaliding, whichever is the greater

Death before retirement (member with preserved benefits)

If the member dies after leaving service, but before uplifting their preserved benefits, the widow(er) may be paid a gratuity equal to the preserved terminal grant which amounts to a tax-free lump sum of 3 times the annual pension awarded, in addition to the preserved pension

Death after retirement benefits

Dependant's Pension - 50% of member’s pension

Widow(er)’s pensions cannot be left by will or awarded to anyone other than the legal spouse. A spouse from whom the member is separated, but not divorced, retains his/her entitlement to these benefits. A common law partner or any other person will not be eligible to receive the benefit

Early leaver options

Preserved pension - If the member does not qualify for immediate benefits when they leave the scheme, but have completed more than 2 years reckonable service, then they are entitled to a retirement pension and a tax-free lump sum of 3 times annual pension when they reach age 60. N.B. Preserved pensions are not automatically paid at age 60, they have to be claimed from the appropriate Pensions Awarding Branch

Transfer value - Permission from the Ministry of Defence is required if a transfer value is requested. The request for a transfer value must be made prior to the member’s 59th birthday

Refund of contributions - Not applicable, however a transfer value may be available

Treatment of pension rights on divorce

Earmarking - The court can order the AFPS to pay all or part of the pension and lump sum to a former spouse. The AFPS will only make payments to the former spouse when a court order has specifically instructed them to do so

If the former spouse remarries, he or she will not receive payments in respect of the pension after date of remarriage, however this normally does not affect the lump sum which has been earmarked

Pension sharing on divorce - The accrued pension rights are reduced by a percentage confirmed by the court. The former spouse is given rights in the scheme equal in value to the amount of reduction – known as the pension credit rights

As the AFPS is an unfunded public service scheme, the former spouse if not allowed to transfer their pension credit out of the AFPS to another pension arrangement

Additional benefits payable which are unique to AFPS

There is a booklet available from AFPS website called “Commutation” which gives full details

Life commutation - For officers, this means the surrender of part of the pension in exchange for a tax-free lump sum for the remainder of the member’s life

For other ranks, Life commutation means the surrender of part of the pension in exchange for a tax-free lump sum for the remainder of the member’s life to finance a specific and approved project

N.B. This benefit is only available to members who were in service on or before 31 March 1978 and in respect of service up to 6 April 1980

Resettlement commutation - This means the surrender of part of a pension to obtain an additional tax-free lump sum, with the restoration of the pension in full at age 55

N.B. This benefit is only available to members who were in service on or after 31 March 1978

Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.

Updated 3 August 2005