New Armed Forces Pension Scheme (AFPS)

When will it be introduced?

• We plan to introduce it for new entrants in April 2005; they would not be able to join the current scheme.

• Currently serving members of the Armed Forces will have the opportunity to join the new scheme as soon as possible after that, and no later than April 2007, depending on how quickly delivery systems can be put in place. Detailed material will be provided before this date to assist with your decision.

What are the key features of the new AFPS?

• Defined benefit scheme. Benefits will be directly related to actual pensionable earnings, rather than depending on the performance of a pension fund.

• Full Career Retirement Age will remain at 55; this does not affect actual retirement ages, which will continue to be tied to Service career structures.

• Common treatment for officers and other ranks. Pensions will start to build up from the first day of service. Officers and other ranks will receive a pension worth 50% of pensionable pay after 35 years and will have scope to earn further pension benefits for longer service. As now, there is also a tax-free pension lump sum worth 3 times your pension.

• Officers and other ranks will have a common arrangement providing compensation for early retirement after 18 years service or at age 40 (whichever is later) called the Early Departure Point, with a preserved pension and pension lump sum at 65. This replaces the Immediate Pension and offers a similar benefits structure including a lump sum and income stream. The value of these benefits will be reduced to fund improvements elsewhere and the pension costs of improving life expectancy. Details have yet to be finalised with the three Services.

• Death-in-service lump sum has been increased to four times pensionable pay – up from 1-11/2 times pay.

• Widow(er)s’ pensions have been increased by 25% and will be paid for life.

• Widow(er)s’ benefits will be extended to unmarried partners, including those of the same sex, where a substantial relationship exists and there is financial dependence or interdependence. There will be a service registration scheme for those in a substantial relationship.

• Children of post-retirement marriages will be entitled to pension benefits.

• Preserved pensions will be awarded to those who leave before the Early Departure Point and will be paid at age 65, rather than 60 as now, to comply with changes to Government policy. This is also the only change to affect the current scheme, but only for benefits earned from future service from a date yet to be decided.

• New three-tier ill-health arrangements, with minimum guarantees for the more severely disabled. Those with minor conditions will be awarded a gratuity.

Why should I read this?

The Ministry of Defence has been conducting reviews of the Armed Forces Pension Scheme and the arrangements for compensating Service personnel or their dependants if they are injured, become ill or are killed as a result of their service. These reviews are now complete and the Government’s decision on the structure of the new schemes was announced in September 2003.

How does it affect me?

This leaflet sets out the key features of the new schemes and how they might affect you.

Pension Scheme

• You can remain on the current scheme and your entitlement to an Immediate Pension benefit is protected.

• You will get the opportunity to choose whether to stay where you are or transfer to the new pension scheme. You do not have to decide now.

Compensation Scheme

• All injuries, ill-health or deaths due to Service caused on or after the date of introduction will be covered by the new scheme. This could affect any of you.

• Injuries, ill-health or deaths due to Service caused before the new scheme is introduced will be covered by current arrangements.

New Armed Forces Compensation Scheme

When will it be introduced?

• It will be introduced in April 2005, and will cover all injuries, ill-health and deaths due to service whose cause occurs on or after this date. If you are still serving, it will apply to you even if you remain on the current AFPS.

• If the cause of your injury, ill-health or death occurred prior to this date, the current arrangements will apply. Those already retired and receiving such benefits will continue to receive them from the War Pensions Scheme and Armed Forces Pension Scheme (as appropriate).

What are the key features of the new compensation scheme?

• For the first time, lump sum awards for pain and suffering based on a tariff with 15 levels of award. This will include injured personnel who remain in service, as well as injuries resulting from warlike acts and terrorism.

• Guaranteed Income Stream (GIS) for life will be awarded for those who suffer significant loss of earnings capacity, based on your earnings in the Armed Forces. Tariff levels 1-11 attract a GIS, the highest tariffs attracting a greater level of award for loss of earnings capacity. Awards will be offset by any AFPS pension benefits, to avoid double compensation.

• Dependants. For a death due to service, a Widow(er)’s GIS will be awarded and paid for life. For death in retirement, a widow(er)’s bereavement grant of £20,000 will be paid. Childrens’ GIS will also be paid. All dependants’ benefits will be offset by any AFPS pension benefits, to avoid double compensation.

• Widow(er)s’ benefits will be given to unmarried partners where a substantial relationship exists, including financial dependence or interdependence. There will be a registration scheme.

• Time limit to claim. Normally five years, but exceptions for specific conditions, which take longer to develop. Also discretion within the scheme to consider cases exceptionally beyond this time limit.

• Only one scheme, instead of two, making it simpler to claim.

• Appeals. MoD decisions will be subject to appeal to an independent judicial tribunal where an individual is unhappy with the handling of a claim.

• No-fault scheme. A successful claim would not prevent you from making a claim for negligence against the Ministry of Defence.

Where can I find out more?

If you have any general questions on the schemes, address them to your commanding officer or your local administration office in the first instance. More details can also be found on:

Internet: www.mod.uk/issues/pensions

Intranet (DefenceNet): www.defence.mod.uk/cr/content/pension.htm but there will be links to these sites from the three Service networks.

You can email general questions to the pensions team on: CHOtS: new-afps policy, and External: new-afpspolicy@defence.mod.uk

They will not be able to respond individually, but will post replies to popular points of concern on the websites.

This document is also available for download in Portable Document Format which requires Adobe's Acrobat Reader application. (click here to download Acrobat)

Summary leaflet of New AFPS and AFCS issues 2003 (PDF 26 Kb)

Last Updated: 20 Apr 04