Armed Forces Pension Scheme 15

Am I eligible?

All Serving members of the Regular Armed Forces and Reserve Forces who joined from 1 April 2015 are active members of Armed Forces Pension Scheme 2015 (AFPS 15).

Following legal challenges, in December 2018 the Court of Appeal found that transitional protection arrangements applied to the judicial and firefighters pension schemes gave rise to unlawful discrimination as transitional protection was only offered to older scheme members. In July 2019, the government confirmed that they would remove discrimination in those schemes by introducing a remedy period.

As part of the remedy, serving members in legacy pension schemes (AFPS 05, AFPS 75, previous Reserves pension schemes) who were previously offered transitional protection, moved to the AFPS 15 scheme on 1 April 22.  Any benefits built up in legacy schemes are protected, and members will receive benefits earned under legacy schemes at the same time as they originally expected to receive them.

When an Armed Forces pension becomes payable, eligible members will be offered the choice of which scheme benefits they wish to receive (legacy scheme or the reformed 2015 scheme) for the remedy period 1st April 2015 – 31st March 2022. More information can be found on Defence Connect at Group: 2015 Remedy (McCloud).

How is AFPS 15 calculated?

Your AFPS 15 pension starts accruing from your first day of paid service.

You need to have at least 2 years of paid Service to qualify for most pension benefits.

AFPS 15 pensions are calculated using a system called Career Average Revalued Earnings (CARE). Every scheme year (1 April to 31 March), the MOD adds 1/47th of your annual pensionable earnings into your CARE ‘pension pot’.

Your pension will start to build up from your first day of paid Service into a ‘pension pot’. Each year, the pot increases with inflation and your further service is added. This process continues each year until you leave the Armed Forces, and this pot will become the pension that you’ll receive. There is no maximum number of years’ Service that can count towards your pension, and the pension copes well with a mix of full time and part time service

What will my final pension be?

Every year around your birthday you will receive a Benefits Information Statement. This will inform you of the value of your pension benefits.

A free pension forecast can be requested once a year from Veterans UK. The application form can be accessed MODNet or the Veterans website. You can also use the online pension calculator to estimate your final pension.

For example: Year 1 – Your earnings are £47,000. This is divided by 47 which means your CARE pot is £1,000. Year 2 – Your earnings are £47, 500. This is divided by 47 to give £1, 010. Your CARE pot is £1,000 from Year 1, plus £20 to take account of inflation (if inflation was 2%) plus £1,010 from Year 2, giving a total of £2,030.

When will I receive my pension?

If you leave the Armed Forces after two years of qualifying service, but before the age of 60, you will receive a deferred pension. The deferred pension can be claimed at your State Pension age (and is paid in addition to your State Pension).

Between leaving the Service and claiming your deferred pension, its value will increase annually in line with inflation (the Consumer Price Index). If you are age 55 or over you can apply to have your deferred pension paid early, but it is subject to an actuarial reduction; this means your pension payments will be reduced to reflect the fact that the pension has been paid early. This reduction is permanent.

If you serve to the AFPS 15 Normal Pension Age of 60, you will be entitled to claim an immediate pension.

Do I get a lump sum?

AFPS 15 does not automatically pay a fixed pension lump sum, since this gives you greater freedom. However a lump sum can be created by ‘surrendering’ part of your annual pension income. This is known as commutation. The commutation rate is fixed at 12 to 1, so for each £1 of pension you give up, you will be ‘buying’ a lump sum of £12. This reduction to pension is permanent and cannot be reversed. Once the pension is in payment, it will increase annually in line with the Consumer Price Index (CPI).

Am I eligible for an Early Departure Payment?

To be eligible for an Early Departure Payment (EDP 15), you must:

- be a member of the Regular Forces and eligible to belong to AFPS 15

- cease to be in Regular Service on or after the age of 40 and before the age of 60;

- have completed at least 20 years of continuous or aggregated Regular service in the Armed Forces.

The EDP 15 consists of periodical payments (paid monthly) and a lump sum. The periodical payments are 34% of the deferred pension entitlement with an additional service allowance of 0.85% of the deferred pension for every year served after 20 years.

The periodical payment is paid at a flat rate until age 55, when it is increased to take account of CPI growth since the date of exit and then increased annually by CPI. The EDP 15 payments begin the day after an eligible person leaves the Service, and end with the day before they reach deferred pension age.

The EDP tax-free lump sum is equivalent to 2.25 times your deferred pension. You can also choose to ‘give up’ your full EDP lump sum to increase the monthly EDP income. This is known as 'inverse commutation', and more information can be found in the AFPS15 Scheme booklet.

Do I get a Resettlement Grant?

You may qualify for a Resettlement Grant if you have served for at least twelve years on discharge and if you are not entitled to an EDP 15, an immediate pension under AFPS 15 or any other Resettlement Grant. The Resettlement Grant is a fixed sum (Apr 2018 £11,651) and is paid to help you adjust to civilian life.

If I die, what pension benefits do my dependants get?

Spouse or partner

If you die in Service, your spouse or partner will receive an immediate pension paid for life and a tax-free lump sum. The immediate pension is calculated in the same way as a Tier 3 enhanced ill-health pension (see the AFPS 15 Guide for more detail) and your spouse/civil partner/eligible partner will receive 62.5% of this amount. The lump sum is 4 times your final pensionable earnings and will be paid regardless of whether you have completed at least 2 years of qualifying service. If you leave the Armed Forces with a deferred pension and die before this comes into payment, they will receive an immediate pension paid for life and a tax-free lump sum. This is also payable if you were in receipt of an EDP before your death. The immediate pension is the same as your deferred pension, and they will receive 62.5% of this amount. The lump sum is your deferred pension lump sum.

If you die after your pension has come into payment, they will receive an immediate pension paid for life and a tax-free lump sum. The immediate pension is the same as your deferred pension, and they will receive 62.5% of this amount. The lump sum is equal to 5 years of pension (minus any pension or lump sum that you may have previously received) and is only paid if you die within 5 years of drawing your pension.

Children

The amount of pension benefits available for eligible children is normally the balance of the pension remaining (37.5%) after the payment of any spouse or partner’s pension. An only child will be eligible to 25% of your pension benefits and two or more eligible children would share equally the balance of your pension benefits after spouse’s, or partner’s pensions are paid. If there is no spouse or partner, all eligible children will share equally 100% of the pension, subject to a maximum of 33.3% per child.

What about the pension I built up in AFPS 75 or AFPS 05 before transitioning to AFPS 15?

The benefits you have already built up in previous pension schemes are known as ‘accrued rights’. These rights vary from scheme to scheme, but the value of pension benefits earned up to the introduction of AFPS 15 are protected. This includes, where applicable, the AFPS 75 Immediate Pension and lump sum, and the AFPS 05 Early Departure Payment and lump sum.

These benefits will remain payable at the time they were expected to be paid, linked to your final pensionable pay/rank at the point of leaving the Services, not the salary and rank at the time of transition to AFPS 15.

How do I claim?