AFPS - not fallen off the perch, but certainly dropped off the radar.

[Al R]

It used to be the case that if a preserved military pension wasn’t claimed within 7 years of becoming due, it would be discounted from future accounting. The past few years worth of accounts refer to a trustee conclusion that a deferred pension wasn’t ever going to be claimed if it wasn’t claimed by that time. Fair enough. But the latest AFPS accounts include a number of important changes, one of which is this assumption being subject to the same administrative action from the age of 72 and not 7 years. On the surface of it, still no change really. But if the preserved pension age is set to shift to the right (and it will) then the margin between someone becoming eligible for a preserved pension and subsequently dropping off the SPVA radar will become finer.

The new guidance is a little more draconian than before as well. Slipped in, it now states that if the pension isn’t claimed by the age of 72, then the pensioner is ‘out of time to claim’, rather than a more benign ‘assumption’. I wonder if that is the motivation behind the drive to shave a few quid off the bill. It doesn’t apply to a few; currently, circa 14,000 ‘due’ pensions remain unclaimed, a figure which amazed me. Does anyone know or have experience of the consequences of someone breaching the 7 year rule please, and if so, what were they? Was the pensioner reinstated quite quickly and easily to the payroll? Voxpop, are you able shed any light on what might happen and why the change has happened? Post the 1975 pension revisions, the number affected is only set to increase (another reason behind the change?) so it isn't a sepia problem.

When changing these documents, why don't the trustees publish a record of important amendments? It wouldn't be difficult.

[Onceapilot]

Thanks for posting Al. I presume, people failing to claim a pension have suffered some sort of unfortunate circumstance that causes this "lapse"? Why would the time limit be imposed at all? I can only assume it reflects an extreme money-grabbing policy? The whole thing stinks.

OAP

[Al R]

I can see why there has to be some sort of administrative line in the sand - if for no other reason because the pension is unfunded. But is it getting less flexible? There are lots of servicemen and women on hard times and ill; that's one of the characteristics of homeless people - that there are lots of SP among them who are simply off the net. It's a bit worrying that there isn't more publicity trying to find these 14,000 "delayed", ignorant or forgetful pensioners, that the implications of not claiming the pension seem to be more calamitous and the window of opportunity to do so is likely to get more compressed.

[Onceapilot]

OK Al, but why does a time limit apply at all? The pensions are owed. HMG will profit from any that are not claimed but,..the pensions are still owed, where is the moral basis of a time limit? The Ex-serviceman/woman will die at some point and unpaid benefits will remain (unfairly) with the public purse. Where is the "military covenant" here?

OAP

[Courtney Mil]

Any excuse to grab anything they can.

[Al R]

OAP

The state doesn't profit per se, because the money for the AFPS divi pot is granted each year by prerogative instrument (compared to other unfunded schemes, funded by statutory instrument.).

So it's always 'there' somewhere to be spent, except it gets shunted from some other g'ment pot to the AFPS one. So, I can see an abstract justification in applying a cut off in the sense that the trustees can't justify being funneled tens of millions extra which, demonstrably, won't be paid to anyone and will just sit there on the AFPS books creating an accounting drag. It may as well stay in the central pot. By contrast, a modern defined contribution pension can simply have any unclaimed funds parked in cash ready for decumulation.

What I do have an issue with, is the nasty, mean spirited and subtle change to referring to claims being 'out of time'. Why the sinister implication - if there was not an intention to rely on that then why use it? And if there isn't a contingency fund ready to dish out all the unclaimed money to the hundreds of ex SP who all of a sudden respond to the awareness campaign (!) to have them come forward to claim their pension then why not and why is there no campaign? And if/when the Normal Pension Age creeps up to 70, then what?

So, you'd like to think that someone, somewhere would wake up to the fact that there are lots of ex SP out there, possibly completely ignorant about their entitlement, and most likely the ones most likely to benefit from a thousand or so extra finest quids each year. The trustees don't have to track them down or even publicise the matter, but just because you don't have to do something doesn't mean you shouldn't. As you imply.. what military covenant?

Forpen doesn't have the mandate so who is left? At this time of year too..?

[downsizer]

Would I be correct in thinking this is more of an issue for those who don't/didn't get an IP and are forgetting to claim their PPs later on at 65ish?

[Just This Once...]

I'm sure there are quite a few forgotten 'low-value' pension pots but there is no excuse for retaining them just because an application is late with no published latitude for unusual personal circumstances.

I wonder what defence the trustees would use when the first challenge reached the Pensions Ombudsman. The trustees have to demonstrate that they are looking after the individual as well the scheme and a decision such as this is ripe for a challenge. It could also mean individuals claiming benefits from one government department whilst having money withheld by another.

[Al R]

Downsizer,

Yes - exactly those people. Last year I met someone in this situation.

JTO,

AFPS is getting interesting, sort of. When appointed, all trustees are reminded that they must always act in the best interests of beneficiaries. The wording is; "Your first duty must be to the scheme beneficiaries, and you must always act in their best interests. A beneficiary is anyone who is entitled to, or who might receive, a benefit from the scheme, now or in the future."

From April 2015, things change anyway. The pensions regulator becomes responsible for standards of AFPS governance and administration, as well as a clutch of other public sector pensions (via the Public Service Pensions Act 2013 which received Royal Assent in April). This is why for instance, everyone will get an annual pension statement from next year and why any potential "poor governance, inadequate controls resulting in deficient administration, or slow or inappropriate decision-making practices" with AFPS service delivery are going to raise external regulatory eyebrows.

I think we're on the al 17 or so of the new guidance to the trustees - and the guidance is voluminous. But, of note to what this thread refers to, para 135 stipulates:

"Schemes should ensure that member records are reconciled with information held by the employer, for example postal or electronic address changes and new starters. Schemes should also ensure that the numbers of scheme members is as expected based on the number of leavers and joiners since the last reconciliation. Schemes should be able to determine those members who are approaching retirement, those who are active members and those who are deferred members."

When I met the old boy in Oakham referred to above, it made me wonder how many others like him were in his situation. Paras 196 and 197 specifically refer;

"Schemes should attempt to make contact with their scheme members and where contact is not possible, schemes should consider carrying out a tracing exercise to locate the member and ensure that their member data is up-to-date.

For the provision of information, a member’s postal address may be their last known home address or their place of work."

Now, I don't know what has been done to harvest all these missing members (the rational for this thread).. I would think that this time of year would have been the perfect time to get some of those 14, 000 or so missing members back on the books. The AFPS landscape is going to be flipped on its head and the trustees are going to become more 'professional' and more accountable. From a professional perspective, it's a fascinating time (yeah yeah.. zzz!).

Public Service Pensions Act 2013 (http://www.legislation.gov.uk/ukpga/2013/25/section/1)