Service Pension Reduction

[orionsbelt]

Full response from MP and MOD

Chaps I attach a scan of the reply from my MP and the MOD.

Following on from that I show how they have calculated my reduction.

This will effect all of you who served during the stated period.
Additionally please note my calculations as this is a living reduction and is recalculated each year, so if you have a pay increase this reduction is also increased!!!!!!!!

*********************

MINISTRY OF DEFENCE
FLOOR 5 ZONE B MAIN BUILDING
WHITEHALL LONDON SW1A 2HB
Telephone: [phone] (Switchboard)

THE RT HON ANDREW ROBATHAN MP
MINISTER FOR DEFENCE PERSONNEL WELFARE AND VETERANS
Our ref: xxxxxxxxxxxxxxxx 11 August 2011

Thank you for your recent letter, signed by a member of your staff, enclosing correspondence from your constituent, Mr xxxxx xxxxxx xxxxxxxx xxxxxxxxx xxxxxx, about the reduction in his Armed Forces Pension under the National Insurance Modification rules.


The reason for the abatement to Mr xxxxxxxx pension goes back to 1948 when the National Insurance (NI) Scheme was made compulsory for all employed personnel.

When flat rate benefits were introduced, the Government took the view that, to avoid over-provision of pension benefits, account should be taken of other benefits payable at the State Retirement Age (SRA).

All employers with occupational pension schemes were required to modify their schemes to take account of the contributions and benefits payable under the NI Scheme.

As a result, on reaching SRA, the Armed Forces Pension Scheme (AFPS) pension of Service personnel who enlisted on or after 1 July 1949 is reduced by £0.8708 per annum for each complete year of reckonable Service between 30 June 1949 and 1 April 1980. This reduction is referred to as the NI Modification rules.

In addition pensioners, like. Mr xxxxxxx, who also contributed to the Graduated Pension Scheme (GPS) whilst in the Service during the period 3 April 1961 to 5 April 1975, have their Armed. Forces pension reduced by the amount of the basic graduated pension (also payable at SRA as State benefits) earned by their graduated contributions. This reduction is known as a GPS abatement.

Officials have confirmed that Mr xxxxxx AFPS pension has been correctly reduced in line with the rules governing both the NI and GPS Schemes at the time of his Service. I can assure both you and Mr xxxxxxx that the reductions applied are not as consequence of him having paid insufficient NI contributions during his Armed Forces Service. However, it is also the case that the State pension Mr xxxxxx has been receiving since attaining SRA on 10 July 2011 will have been enhanced by the contributions he made to the NI and GP Schemes.

************

I hope this reply is helpful and explains the position

Now for calcs on My reduction.

I have 12years service that counts so 12 * 0.8708 = £10.44
Also I have a figure of £24.70 for GPS so combined that is £35.44

However now comes the big RUB that £35.44 is indexed at a set rate of 5.2582% for every year since I left in 1976,. So in my case that is 35 years compound and comes to around £214 pa for Tax year 2011/12.
Additionally that will be further indexed for each future year I.e. the figure is revised annually.

This is nothing to do with Tax code changes or anything else

So there you go, as a matter if Interest I have 45+years NI contributions
with most of them at the highest rates. And years as a higher rate income Tax payer. No words can explain My thoughts on this, It just stinks!!!!!
I will not talk about the other tax chages as I get stung by them as well. I saved up for my old age!!!!!!
It really sums up the attitude of the Gov (any of then ) wrt service personel. I think we should listen to the TUC ????????

Have fun
***