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Al R
1st Apr 2015, 07:21
Greetings to the new military pension scheme. Don't forget, average pays!

https://www.gov.uk/government/publications/afps-2015-what-you-need-to-know/armed-forces-pension-scheme-2015-guidance

octavian
1st Apr 2015, 18:52
Is this an Omen?

en2dsh
1st Apr 2015, 18:55
Must be an April Fools ;)

Melchett01
1st Apr 2015, 19:13
A baby or a chimera?

As for being an omen, all we need is for the next CDS to be called Damien and then we're well and truly up the creek :eek:

ValMORNA
1st Apr 2015, 20:24
M.01,


Thanks for that idea! My Granddaughter had a son this morning, 2.am, and I understand that they haven't yet committed to a name. I think I'll suggest Damien. Thanks again.

octavian
1st Apr 2015, 20:31
Dear ValMORNA,

Not Damien. It's so last century. In fact, don't try to influence her. But do let us know your grandson's name.

Oh, and Melchett,

I think we're already up the creek.

Training Risky
2nd Apr 2015, 01:02
We passed Sh!t Creek in 2006 when we entered Helmand with a single battlegroup, we are now lost in the middle of Sh!t Ocean.

Our boat is leaking (built by British Waste-O-Space with a second to be built in a marginal Scottish constituency)...

One paddle has broken, the spare paddle (taken as a capability holiday in 2010) is currently being sourced by a 'smart procurement' civil servant at DES...

Our boat is surrounded by a fleet of ISIS/AQ/Russian rigid raiders taking pot shots...

...and there is an ominous post-election, post-Afghan shaped thundercloud on the near horizon, threatening to sink the boat with an 'agile, adaptable and capable' flavoured lightning bolt.

Good luck to all who stay!:ouch:

First_In_Last_Out
2nd Apr 2015, 09:03
TR, that post was possibly sponsored by red wine, but bravo :D

Melchett01
2nd Apr 2015, 12:11
Currently sitting in the office on leave doing admin and stumbled across a fact which hasn't been widely published and many may not realise:

If you are paying into an AVC to top up death in service or enhance spousal benefits, those AVCs will now cease owing to AFPS 15 providing comparable benefits automatically. Obvious when you think about it really, but with the pace of life and ever changing policy how many have time to sit down and go through the fine detail.

If you're paying into an added years AVC there's no change; everyone else will see a bit more in their monthly pay.

Melchett01
30th Jan 2016, 13:07
As Courtney noted on another thread, what a great state of affairs when we have to come on here and Egoat for advice because the MOD can't/won't explain pensions.

However, and I swear I don't spend all my time reading pensions and tax bumf, an article in the DT on lifetime allowances got me thinking. After a bit of hunting I stumbled across this from HMRC - technical advice on when the lifetime allowance doesn't apply.

http://http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM03106050.htm

To save you reading the whole lot, the key bit is as follows

Certain schemes listed in the Registered Pension Schemes (Prescribed Schemes and Occupations) Regulations 2005 give their members a right to take pension and lump sum benefits below the normal minimum pension age. These schemes are

The Armed Forces Pension Scheme
The British Transport Police Force Superannuation Fund,
The Firefighters’ Pension Scheme,
The Firemen’s Pension Scheme (Northern Ireland)
The Gurkha Pension Scheme,
The Police Pension Scheme,
The Police Service of Northern Ireland pension Scheme, and
The Police Service of Northern Ireland Full Time Reserve Pension Scheme.

Where a member of such a scheme takes a pension or lump sum benefits before the normal minimum pension age, there will be no reduction in the individual’s lifetime allowance (see RPSM03106020).

I know I can read, and on a good day, with the wind in the right direction and a suitable amount of caffeine in the system, have moments of lucidity and maybe even occasional flashes of intelligence. To my little brain, the above suggests that AFPS is not subject to the pensions tax lifetime allowance and therefore we might not have as much to worry about as first thought - especially if the govt reduces the allowance even further in the next budget. What have I got wrong or what am I missing???? And if we aren't subject to a life time allowance, does that read across to the annual allowance which seems to be shrinking rapidly by the minute? Or do we fall foul of our pensions being titled as 'early departure payments' until you hit SPA? That wouldn't surprise me in the slightest.

Al R
30th Jan 2016, 13:50
I commend your fortitude for engaging with HMRC tech. Do you want a job?

If your scheme allows you to take benefits before the normal pension age and the early withdrawal isn't due to extenuating circumstances, ill health etc, your LTA is reduced by 2.5% pa to reflect the premature crystallisation. However, with AFPS, your LTA isn't reduced because the scheme is one which is protected.

It's saying that if you retire and crystallise benefits before normal pension age of fifty, because you're in AFPS, you're subject to protection.. not that the LTA doesn't apply in the wider sense of it dropping. And you can then be demobbed and continue to accrue benefits to the normal LTA of the day with Virgin, BA etc.

Osborne is likely to reduce pension tax relief for HRT Payers from 40% to c.25-33% for everyone, on March 16th. He won't want to alienate the heartland so I wouldn't be surprised if he raises the LTA again (before 2020) to appeal to them. He may even decide to do away with it completely, giving someone else down the line the chance to earn kudos by once more, reining it in.

Plus ça change, plus c'est la même chose.

Mach Two
30th Jan 2016, 20:53
Melchett,

Well done. Good research. I have just returned from a spell away where I was lucky enough to be working along side a very smart admin bloke. He was telling me much the same thing so it's good to see it see it from an independent source.

As you and Courtney rightly say, isn't it crazy that we have to come here for financial advice on military pensions? We'll be coming here for gen about our new aircraft next!

Thanks.

The Old Fat One
31st Jan 2016, 08:18
As you and Courtney rightly say, isn't it crazy that we have to come here for financial advice on military pensions?

It might seem so, but actually it is entirely normal. I now work in the same industry as AL R (different "permissions") and therefore spend much of everyday on the phone talking to intermediary support teams from every major and minor lender and insurer in the UK...the support you get can be described in one simple word

Mixed

These are frontline phone operators. The big boys knowledge-wise (underwriters for example) are several layers back and usually inaccessible to the public and often us intermediaries too.

I expect it is exactly the same in the public sector - the people you "interface" with will often be limited in what they know and what they can do.

Not saying this is in any way correct - I'm just saying it is the modern world and therefore makes forums like this, where people with real experience and real knowledge lurk, all the more valuable.

Lima Juliet
31st Jan 2016, 09:41
very smart admin bloke

Shurely some short of mishtake in that sentence...:ok:

LJ

Lima Juliet
31st Jan 2016, 09:49
Al R

If I read your post correctly, you are saying that if your AFPS goes into payment before 50 and then you start another pension (ie. with BA, Virgin or even AFPS 15 if you retired early on AFPS75) then the sums of money paid on your retirement before age 50 do not count in the LTA calculation? (which I think is taxed at 25% over £1M on retirement).

Is that correct?

LJ

Al R
31st Jan 2016, 10:04
No, they do count. But because AFPS is a protected scheme, if you draw benefits before the normal pension age you don't get the arbitrary reduction (2.5% per annum) applied to your LTA thereafter.

Al R
1st Feb 2016, 08:50
HMT flying a kite.

George Osborne looking at limiting lifetime pension allowance to £750k | Daily Mail Online (http://www.dailymail.co.uk/news/article-3414867/Not-New-plot-raid-pension-pot-Treasury-looking-limiting-lifetime-allowance-750-000-restricting-away-year.html)

Lima Juliet
2nd Feb 2016, 21:38
Thanks Al

Let's hope that £750k LTA doesn't come in though... :eek:

Al R
3rd Feb 2016, 08:25
I can see why some sort of change could happen, I'm finishing off a blog on it. Namely, if Osborne reduces the pension tax relief rate to a flat 30% instead of 45/40/20% (depending on your marginal rate), it stands to grossly disadvantage anyone not in a final salary scheme; more so, those of us who benefit from, or who have benefited from, membership of a public sector final salary scheme.

The state wants to simplify company administration but anyone still offering a final salary scheme will pull its payroll hair out coming to terms with administering this. The other option, changing the theme of the annual allowance instead of just the limit, could allow a core benefit as DB accrual, and then transiting to DC terms for pension income over, say, £20,000-£25,000; that's certainly something else he could consider at some point.

As could combining the annual and lifetime pension and ISA allowance. I don't think he's so clumsy as to simply reduce it; this would impact on Flt Lt PAS, crusty old MACR, Sqn Ldr etc, rather, he seems to be gauging feedback and setting the scene. But he, and IDS, are certainly in belligerent mood right now. He still has three years plus to ride out the carnage and still kiss enough babies to get himself elected, so if he did want to rock out some bad news, why would he wait?

Al Rush | Lifetime Allowance (http://www.alrush.biz/lifetime-allowance/)

Melchett01
3rd Feb 2016, 15:42
I'd be really suprised if they did lower the lifetime limit to £750K ... Osborne is supposed to be vaguely intelligent.

Such a futher reductions effectively kill off pensions at a time when the Government is desperately trying to get people to take responsibility for their old age provision. I don't even think you'd have to be a high flier to hit the 750K mark, just lucky on the back of some hard work to put money aside from an early age in some well selected investments and let compounding do the rest. And if you suddenly find yourself with the prospect of a 55% punitive tax on your successful investment endeavours, why would you bother? Is there a govt policy we don't know about to force us into reliance on the state in old age and therefore compliance?

Moving from the general to the military specifically, as you say, I can see such a move impacting on the likes of sqn ldrs and flt lts on PAS. Was that the intent to hitting these outrageously averagely salaried fat cats? So having already reduced pensions and messed around with pay, does the government really think people are going to hang around to have the bat inserted again? As soon as people realise there is no way to pull out of the pension without alternative arrangements whilst still receiving an abated salary it will only serve to exacerbate the rush to the exit.

This is definitely a be careful what you wish for moment for Gideon.

PS: thanks for the kind job offer Al, not sure your clients would quite appreciate my ' close enough for government work' approach!:ok:

Al R
4th Feb 2016, 09:19
Webb has done a broad brush piece for the FT. This link should defeat the paywall. He now earns a shekel from Royal London (a very good pension company) which (given its saver demographic) would stand to benefit from a flat rate rebalancing to 30%.

George Osborne should scrap the pensions lifetime allowance - FT.com (http://www.ft.com/cms/s/0/07e8479a-c6b2-11e5-b3b1-7b2481276e45.html#axzz3zBBKllhg)

Al R
6th Feb 2016, 09:40
If true, Katie Morley has pulled a rabbit out of the hat with this one. In essence, AFPS was contracted out, ie, you gave up additional state pension benefits in return for a better occupational one.

That meant that many folk on the cusp of drawing the new, single tier state pension should receive less than someone who wasn't contracted out because they wouldn't have had time under the new state regime to boost NIC contribution levels to what was required. It's why servicemen and women pay so much more in NIC now, than they did last year.

If Morley is right, and it seems she is probably well researched on this to be safe, the state pension component for those about to draw it may well be smaller than even anticipated. On the surface of it, some may get one bigger though. Staggering. Time for the mess Webley for someone I think, especially as it seems they have been quietly sitting on it for some time.

The separation of NIC from HMRC and the fact that DWP and HMRC just don't work together has created, potentially, a holy mess. It will be interesting to see if MoD still keeps records (post 2012, it wasn't required to do so) and whether the data that it does hold on you, in respect of your Guaranteed Minimum Pension, equates to that which the government assumes you have.

Four million people retiring from April could get the wrong state pension - Telegraph (http://www.telegraph.co.uk/finance/personalfinance/pensions/12143174/Four-million-people-retiring-from-April-could-get-the-wrong-state-pension.html)

hippocrates
6th Feb 2016, 12:57
Al,
Is this the start of 'Means testing' pensioners by stealth.......?
AFPS pensions are seen by many as gold plated.
If the article is correct, this is an ideal way for the government to abate our overall retirement income, clawing back something from a group of people that it thinks are getting too much.

Hippo:ouch:

Al R
7th Feb 2016, 07:17
If he introduces a flat rate of tax, it'll be hellishly complex for defined benefit schemes anyway, but in particular for AFPS which will be fiendishly complex to administer. If he seeks to tax contributions at source, at marginal rate, an employer's pension contribution will have to be taxed at 20, 40 or 45% before a flat rate 25 or 30, or 33% subsidy (tbc, if any change at all) is added.

It will be complicated for everybody, but virtually impossible to administer in the case of public sector defined benefit schemes, and as for AFPS.. I can't even get my head around the notion of taxing a non contribution. In effect, some savers will be ‘fined’ for making pension contributions, before getting the flat rate benefit added. Too early.. coffee!

Either way, it won't be pretty - I'm thinking that if a serviceman of woman gets taxed on that which he contributes, in an instant, their rights will change. No more of the cosy amateurism that has defined how the military pension is implemented - and certainly an end to instances we had, when people were sacked days away from an IP.

He could just decide to get rid of tax free cash or reduce the amount you can take or reduce the annual allowance even further..

4everAD
7th Feb 2016, 08:36
I like to think of myself as fairly intelligent but I must confess to not having a clue about the intricate workings of pensions and the associated tax implications. That said how the hell do the government expect the masses to invest in a pension if they keep tinkering and making it so damn complicated for the average Joe to understand?

Al R
7th Feb 2016, 08:46
I couldn't agree more. We don't make widgets anymore, so we use wealth instead. It would be nice if Osborne didn't use general contentment and personal happiness as a screwdriver with which to make mid course corrections and short term tweaks to his career ambitions. There's an entire industry (and I'm not oblivious to charges of hamfisted irony) now established to feed the demand, and more importantly, the Exchequer. It has replaced widgets.

hippocrates
7th Feb 2016, 10:46
Al,
The concept of taxing us on something which we have no choice over and which some would say has never existed is something that has vexed me for ages.
We do have the choice to stop paying into the pot but, if my pay is abated by x% to account for my pension then surely we should be able to get the abated percentage back if its not paying into our pension?
i suspect we are collateral damage in a wider offensive but it certainly leaves a bitter taste.

Voxpop
8th Feb 2016, 07:28
You can opt out (which would stop the pension growing) but you wouldn't get extra in your pay packet either. The courts have ruled that the scheme is non-contributory, irrespective of the abatement factor.

4everAD
8th Feb 2016, 09:22
You can opt out (which would stop the pension growing) but you wouldn't get extra in your pay packet either. The courts have ruled that the scheme is non-contributory, irrespective of the abatement factor.

Non-contributory? But they pay you less to take into account the pension, sounds like a contribution to me! No wonder l have little faith in this government or the justice system.

Al R
8th Feb 2016, 10:03
Opting out could have considerational merit for lots of people, in principle.

Having a beefy promotion late in the day could create a liability with a skewed annual allowance/defined benefit liability that you might want to place instead, with a personal scheme that offers you more flexibility and unfettered, earlier access.

To see why the country is so stuffed, if you're bored, here's my blog from last year commenting on the UK WOG accounts. The next ones (this year's) will make for interesting reading. Well, I say interesting.

Al Rush | Wanted: Bill Gates and 40 of his just as successful mates (http://www.alrush.biz/wanted-bill-gates-and-41-of-his-equally-as-successful-mates/)

Melchett01
8th Feb 2016, 21:45
I'm with 4everAD on this - are they making this deliberately difficult just to hide what is going on? To quote Sir Humphrey, Osborne is most definitely conducting himself in a manner which, all things being considered, and making all possible allowances, is, not to put too fine a point on it, perhaps not entirely straightforward. Just what the hell are they doing down there? Even a bear of the meanest intelligence can see that all they are doing is storing up even more problems for the future. This constant buggering around with pensions will simply force people to say:

'sod it, it isn't worth it; with all the changes and tinkering, the only thing I can guarantee is that I'm going to get screwed by something I don't and can't understand. I'm not playing, the State can sort me out in retirement!'

Well, that constant tinkering (or is pandering to the politics of envy to win a few votes, I can't quite tell) might enable Gideon to plug the gap now - only it won't if the recent IFS report is to be believed - but forcing more people to rely on the state in later life by disinsentivizing saving now is a recipe for disaster when the demographics are already skewed towards an aging population. If this is the sort of muddled thinking they churn out at Oxford, I'm glad I decided against it and went to a decent university!

Well that's the rant bit over, but just what can we do to mitigate such stupidity? If we stay in AFPS for the long haul, it's likely to lead to a potentially significant tax bill; if we pull out of AFPS we don't get any compensation of abated salary. I would almost be prepared to do a deal with the MOD: stop paying my pension contribution and instead meet my annual ISA allowance. It would save the MOD a reasonable sum each year (potentially quite a bit taken across the services) and enable me to avoid a tax bill for doing nothing other than my job. Frankly the 'promise' of an index linked pension is becoming more and more notional given constant tax and scheme changes. At least I'd be master of my own destiny this way.

The potential lack of options and the seeming inevitability of yet another shafting is not only frustrating but damaging to morale and operational effectiveness. God knows how much time is being wasted at units up and down the country as rather than doing their jobs, individuals are sitting in crew rooms talking about it or hunched over DINs and calculators trying to work it all out.

Al R
9th Feb 2016, 07:58
The Express now reporting on it.

HMRC data blunders mean millions could get a lower flat-rate pension payout, experts warn | UK | News | Daily Express (http://ow.ly/Y4Ipa)

Melch, if the Chancellor does reduce annual and/or lifetime allowance it will signal the end of the phony war. We will be seeing, properly, the much vaunted but always brushed under the carpet beginning of the end for (unfunded) public sector pensions. Will mil be a different kettle of fish, could the Exchequer afford or justify a pay hike to reflect the AFPS abatement?

Melchett01
10th Feb 2016, 21:51
Al,

I just don't know what to think anymore on pensions; I just can't trust a word anybody says these days. We hear that the AFPS 15 scheme is good for 25 years and there will no further fundamental change, but then you get fundamental change because of changes to underlying policy and rules.

They probably can't afford to increase salaries to take the abatement into account. Well, they probably can, but I doubt they would, probably citing the need to get debt under control, don't want to set a precedent, public sector all in it together etc. They'd probably even cite the risk to inflationary pressures with a rise, that despite the inflation rate being substantially below the 2% target for how long now? The double-digit pay rise for MPs wouldn't even register on the hypocrisy & moral maneuverability scale. When it comes to pensions I just wonder 'what now?' whenever I hear Osborne et al opening their mouths and wonder why we all bother making the effort. After all, that the much vaunted SDSR focused on equipment budgets and completely neglected the personnel side, just points to how seriously they consider people as the most valuable asset.