Pension commutation

[SaddamsLoveChild]

Ladies and Gents,

If you are intending commuting any/all of your eligible pension amount check the DIN 12/07. It is not for the public domain.

[Melchett01]

No access to work IT at the moment, but why do I have a sinking feeling in the pit of my stomach that it isn't going to be good news or anything in our favour.

[D-IFF_ident]

Better go make a cameo appearance in the office then! ;)

[Kitbag]

Seems to apply to Civil Serpents following your posted reference. Perhaps more info, such as the full number of the DIN? Unless you are referring to the faff which is already covered in the last few posts of the JPA thread?

[Wrathmonk]

On the assumption that this thread is meant to refer to the changes to how much of your pension you can commute under AFPS75 see this link (http://www.mod.uk/DefenceInternet/AboutDefence/CorporatePublications/PersonnelPublications/Pensions/AFPS75/Afps75Commutation.htm)for the words in black and white.

The DIN SLC refers to is indeed for the civil service.

[Top Right]

Wrathmonk, thanks for the link.

Anyone spot the dumbing down at the end of the first para? Having said "concurrently" it then offers in brackets (at the same time). Never seen an MOD document before with definitions of big words included for assistance.

Or maybe this is to remind us what the word means. It is easy to forget when we know from DPAs that we would never do 2 Medium Scale ops concurrently for a sustained period, so as long as we continue in our 2 busiest theatres then "concurrently" couldn't possibly have meant "at the same time". Thanks MOD, for the reminder!

[South Bound]

Basically the IBN that came out is a 'Wait-Out' on proposed changes forced into being by the Finance Act 2004. FA2004 limits the amount of benefit one can draw from a pension scheme to 25% (formally 50%) FOR SERVICE BEYOND APR 06 (previous service unaffected).

How this will affect us is unclear and will be cleared up in a renewed DIN in the future, but smart money is on a reduced commutation figure. Bugger.

[Lionel Lion]

Since we're on commtation and the JPAC chap is no use! (and I'm a financial thickie, and tried to understand the apfs 75 brochure)

Annual pension = 12000 ish

terminal grant = 3 x 12000 = 36000

max comutation amount is 27000

pension abatement = 3000/annum

Does that mean terminal grant is abated to 27000 (3x 9000) with max commutation or does it stay at 36000

therefore do I get about 9000 a year plus 27+36= 63K lump sum or 27+27=54K lump sum

TVM

[Ron Fenest]

You get terminal grant at 36K plus 27K and then 9K a year until aged 55.
Then it reverts to 12k per year plus the total of annual RPI increases over 15 years (assuming leaving at 40) normally a 50-70% increase
as an aside.. that figure of £27k to commute looks high
my terminal grant is £42k plus £16k commute leaving £12k a year to 55, are you perchance an officer leaving at 37 ?

[Lionel Lion]

Thanks Ron for the quick reply

38 point actually, days to do are getting few! (and hopefully done my last det!)

[Ron Fenest]

No probs, don't forget to write off for your pension forecast, it took 3 weeks for mine to arrive. You need to tell them in advance that you want to commute.

Good luck!!

RF..5 months 4 days to do

[South Bound]

Ron, sorry to contradict, but your commute figure looks low to me! Mine will be about £45k grat + £35k commute....

...but this will depend on the stage at which you retire. The closer you get to a full 35 (ish ) year career, the smaller the amount (as a proportion) you can commute. Officers leaving at 38 will get the maximum commutation when compared to their gratuities...

[dallas]

don't forget to write off for your pension forecast, it took 3 weeks for mine to arrive.
What's the procedure? Surely there's a form?

[Ron Fenest]

Southbound. Slightly different for me as I'm NCO filth and I've gone past my 22 by a bit. Would of made a whole world of difference if my flying pay was pensionable but I won't go into that right now :mad:

Dallas. Would be nice if there was a form but I couldn't find it. I was told to write a letter to Glasgow asking for a pension forecast, apparently you are not even supposed to phone them (or they have made it very hard to get a useful number).

[Sloppy Link]

Have heard tell there comes a point that commuting (sp?) is not a sound financial decision and you are beter off accepting your pension and lump sum as is. Any dosh meisters out there who can advise? 5 years commissioned service from the ranks, aged 47, about 26 years reckonable service, AFPS 75, non PA/PES(A).......(Ron, I'm with you on this one, prime reason I'm off).

[johnny99]

SL

The sound advice is to commute for the simple reason that your gratuity is tax free - your pension is not. As always however there is a personal dimension to the decision. If say you going to be putting your feet up and solely dependant upon your pension for income then you may wish to maximize your monthly pension payment and by not commuting. If on the other hand you are leaving to full time (hopefully well paid) employment then you may not be all that bothered about a lower monthly pension payment vice a larger tax free gratuity.

As for request for pension forecast - this is definitely sound advice. I ask for one every 2 years and make a point of retaining the statement; harder for the buggers to default then! Just drop a line - use text speak for the poor JPA chaps , they don’t do big words well!

[Ron Fenest]

Sloppy, I agree with Johnny. I've spent a lot of time doing the maths on this one. I am lucky enough to be leaving to a very good salary and another final salary pension scheme. I could probably just let my pension payments build up in an investment and not miss them too much.

Having said that I am booked in to see an independant financial advisor to look at all my options and I recommend that you do the same (I'm sure you would anyway).

[Ginseng]

"The sound advice is to commute for the simple reason that your gratuity is tax free - your pension is not"

If you look at the number of pounds of future pension payments you surrender per pound of extra lump sum gained, I think you will find that aspect has been taken care of. The sound advice is to consider carefully when you most need the money, and how you would intend to use it. Commuting may be a good idea, or a bad one. It all depends on your aspirations.

Regards

Ginseng

[50+Ray]

If you are leaving while still well short of your 'Old Age Pension' date then it may be worth pointing out you might not live forever. Commuted money is in the bank, and after death the wife gets 50% of the pension plus the benefit of anything you may not have blown from the lump sum. I am still flying and have passed the 55th birthday, but I have no regrets about grabbing all I could get on leaving at 38.
Ray

[Ron Fenest]

Just thought I'd add this.

As stated in a previous post I was told to write to the SPVA to get a pension forecast prior to leaving. I did this as I needed an accurate forecast.

The reply I got simply said, please use the online pension calculator which is as accurate as it gets. I know this not to be true because the online pension calc does not take into account the new DIN.

Put simply it is worthwhile writing to the SPVA if you are already out and require annual updates on your pension but don't bother if you are still in as they are pretty useless.

[seafuryfan]

The SPVA wrote back to me too. They are unable to give me a pension quote because they are still waiting for advice from some Govt department.

A mate in the office thinks it won't make much difference to my pension as I've already done 25yrs).

So, as some woman said on Corrie, "Oooooh, I don't really know".

[dallas]

...after death the wife gets 50% of the pension plus the benefit of anything you may not have blown from the lump sum.
I wondered about that and in the FAQ link below I read it that only AFPS05 benefits are transferable...some sort of 'discretionary change'(?) on pages 6 and 8. I'm not an expert though and may have misunderstood.

http://www.mod.uk/DefenceInternet/AboutDefence/CorporatePublications/PersonnelPublications/Pensions/AFPS75/Afps75FrequentlyAskedQuestions.htm