Armed Forces pension
Kreuger,
That's the way I understand it - you'd get what you earned for your service up to 53 when you left service, and assuming that was at 55, the remaining 2 years pension would be based on the new career average scheme and paid at 60 - effectively a second pension.
But I would say that I'm not an adviser of any kind, so you might want to get that confirmed by someone actually qualified to talk pensions. (Although I am hoping I'm right, otherwise it's going to be a bumpy ride!)
That's the way I understand it - you'd get what you earned for your service up to 53 when you left service, and assuming that was at 55, the remaining 2 years pension would be based on the new career average scheme and paid at 60 - effectively a second pension.
But I would say that I'm not an adviser of any kind, so you might want to get that confirmed by someone actually qualified to talk pensions. (Although I am hoping I'm right, otherwise it's going to be a bumpy ride!)
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My advice remains the same as it always has.
When it comes to pensions...
1. Trust no ****er.
2. Read everything.
3. If in doubt (any doubt) bank what you have, select ****ing off devices to fine pitch, and exit stage left into the sunset, middle digit at maximum extension.
4. Trust no ****er.
PS
I love a mixed metaphor.
When it comes to pensions...
1. Trust no ****er.
2. Read everything.
3. If in doubt (any doubt) bank what you have, select ****ing off devices to fine pitch, and exit stage left into the sunset, middle digit at maximum extension.
4. Trust no ****er.
PS
I love a mixed metaphor.
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Thankfully melchett I go next year with a full PA Pension and will be a happy man. Wing Commanders pension and I am only a Flt Lt
. Good job I didn't work very hard at getting promoted.
. Good job I didn't work very hard at getting promoted. 
Oh and at the same time make sure every other public sector pension scheme makes their people richer, but who are we eh?
Comparitively speaking, the armed forces pension scheme is a Rolls Royce of a scheme. The vast majority of people in UK PLC don't even have a pair of roller skates when it comes to retirement. Most UK public sector schemes are pretty damn good and the armed forces one is as good as any and better than most.
Show a little perspective please....
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Indeed - couldn't agree more with this..
Kreuger, your post last night is about right and there will be ringfenced rights, but hey - who knows what tomorrow brings with this bunch? Will there ever be an end to this dreadful mismanagement? I would like Rutland to declare UDI and be done with it, I'm just so fed up with paying taxes to people I wouldn't trust to run a coffee swindle. I even had a client ask me last week about transferring an accrued AFPS 'pot' to a private pension (NOT a good idea in that instance I should add) in order to protect it from future uncertainty - that question would have been unheard of a couple of years ago.
There is much that those guys on your sqn could be doing to protect themselves. However, the g'ment is saying that it is that short of money that the National Employmment Savings Trust (NEST) pension scheme could be deferred. If those mates of yours were 50 and working for some civvy organisation, they would be even more seriously stuffed - paying through the nose to offset the start up costs for an expensive scheme and then retiring before the costs are reduced
. But I hope they are thinking beyond their AFPS entitlement to offset and mitigate potential bad news.
Servicemen and women in their 40s/early50s have some really difficult (easy maybe?!) decisions to make right now.
So if you have an option point 2014/15, I think an awful lot of people will be looking to bank what they have before they find themselves scrabbling round for a job at 55 whilst waiting for the pension to kick in. The cynic in me says any such scheme to stop you taking your pension at 55 whilst leaving you trying to find a job is a deliberate ploy to get people to either PVR or leave at an option point so they don't have to pay redundancy.
There is much that those guys on your sqn could be doing to protect themselves. However, the g'ment is saying that it is that short of money that the National Employmment Savings Trust (NEST) pension scheme could be deferred. If those mates of yours were 50 and working for some civvy organisation, they would be even more seriously stuffed - paying through the nose to offset the start up costs for an expensive scheme and then retiring before the costs are reduced
. But I hope they are thinking beyond their AFPS entitlement to offset and mitigate potential bad news.Servicemen and women in their 40s/early50s have some really difficult (easy maybe?!) decisions to make right now.
Actually Al, I see it as an easy decision for the 30/50 year olds:
If you're 50'ish now then leave at 55 with 90% of the originally expected pension and have a minor top up at the age of 60. You will be pissed off and angry but it's managable and obviously, you will have already made the decision at your 44 point that you preferred to stick with the RAF till the end and not go chasing a decent second career while time was on your side.
If you're 30'ish now, then continue to enjoy what you can and maybe consider staying to your 38 point. But at that stage, you will be fully focussed on your second career in life with a view to rising up some civilian promotion chain to a reasonable level of responsibility and working till the age of 65/66. Dare I say it, regardless of rank, you would be almost foolish to stay in.
As for the 40'ish year olds, I think a significant number would go at the 44 point if that date is to the left of the new policy start date and the rest will be looking to get out as soon as the jobs market will allow. No doubt, there will be lots of head scratching over the (previously unexpected) need to make a big life decision but this is the group that will be most drastically hit.
As for the future of the RAF, only the losers will stay past 38/44 with even worse leadership from above. They will probably be the same people who leave at 55 and sign straight on the dole, having spent their entire gratuity on reducing the mortgage.
Just seems to me like an amazing hole that Hutton/Govt/MOD have not taken into consideration. The Armed Forces Normal Pension Age will move from 55 to 60 to reflect the unique characteristics of their service but the retirement age will remain at 55. Surely, the 2 are inextricably linked?
If you're 50'ish now then leave at 55 with 90% of the originally expected pension and have a minor top up at the age of 60. You will be pissed off and angry but it's managable and obviously, you will have already made the decision at your 44 point that you preferred to stick with the RAF till the end and not go chasing a decent second career while time was on your side.
If you're 30'ish now, then continue to enjoy what you can and maybe consider staying to your 38 point. But at that stage, you will be fully focussed on your second career in life with a view to rising up some civilian promotion chain to a reasonable level of responsibility and working till the age of 65/66. Dare I say it, regardless of rank, you would be almost foolish to stay in.
As for the 40'ish year olds, I think a significant number would go at the 44 point if that date is to the left of the new policy start date and the rest will be looking to get out as soon as the jobs market will allow. No doubt, there will be lots of head scratching over the (previously unexpected) need to make a big life decision but this is the group that will be most drastically hit.
As for the future of the RAF, only the losers will stay past 38/44 with even worse leadership from above. They will probably be the same people who leave at 55 and sign straight on the dole, having spent their entire gratuity on reducing the mortgage.
Just seems to me like an amazing hole that Hutton/Govt/MOD have not taken into consideration. The Armed Forces Normal Pension Age will move from 55 to 60 to reflect the unique characteristics of their service but the retirement age will remain at 55. Surely, the 2 are inextricably linked?
Last edited by Party Animal; 8th Nov 2011 at 16:41.
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This is massively scary. Yes I think we will have to contribute more in the future for our pension fund. But no lump sum or immediate pension if you PVR before 55, or no pension between 55 & 60 when you will find it hard to get a second career! This equates to an enormous loss of future earnings you plan all your service life to get to say: help buy a house, reduce the mortgage when you leave the service or put your kids through University.
People mention that everyone in the country is being affected by pension changes so why should we complain about our ‘gold plated one’ being changed. True but reason this: How many other jobs do you willingly let yourself be put in war zones, moved around every few years or be deployed at short notice for long periods. All of this is also sharply endured by friends and family?
I hope we just get increased contribution with those currently in the service able to keep their immediate pension and lump sum both on PVR or at 55. If not I feel there may be a rash of experienced, skilled, previously loyal 38-53 year olds opting for PVR before any changes occur.
People mention that everyone in the country is being affected by pension changes so why should we complain about our ‘gold plated one’ being changed. True but reason this: How many other jobs do you willingly let yourself be put in war zones, moved around every few years or be deployed at short notice for long periods. All of this is also sharply endured by friends and family?
I hope we just get increased contribution with those currently in the service able to keep their immediate pension and lump sum both on PVR or at 55. If not I feel there may be a rash of experienced, skilled, previously loyal 38-53 year olds opting for PVR before any changes occur.
TOFO stated:
True, I have just retired, full stop. My 16 years of RAF service gives me twice the pension that my 16 years of Civil Service pension does - and this for the same final equivalent rank!!
{yes, I know the civilian equivalent rank thing is Bo**ocks but it is the only comparison I have}
Nope...not even close!
Comparitively speaking, the armed forces pension scheme is a Rolls Royce of a scheme. The vast majority of people in UK PLC don't even have a pair of roller skates when it comes to retirement. Most UK public sector schemes are pretty damn good and the armed forces one is as good as any and better than most.
Comparitively speaking, the armed forces pension scheme is a Rolls Royce of a scheme. The vast majority of people in UK PLC don't even have a pair of roller skates when it comes to retirement. Most UK public sector schemes are pretty damn good and the armed forces one is as good as any and better than most.
{yes, I know the civilian equivalent rank thing is Bo**ocks but it is the only comparison I have}
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Are you doing salary sacrifice?
The employer is putting in, erm.. nothing? Out of interest, is this something it is now pushing out to the whole workforce after having done nothing previously?
The employer is putting in, erm.. nothing? Out of interest, is this something it is now pushing out to the whole workforce after having done nothing previously?
So the government has said that anybody retiring in the next ten years won't be affected by any changes to the public sector pensions
Maybe,whoever in the MOD is tasked with looking at the new scheme needs to sit on their hands for a while. Or someone needs to ask the Pensions Minister for an example showing how a 45 year old SP will not be financially affected over the next 10 years...
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I'm no fan of getting a smaller pension but we need to face a few facts. The figures quoted earlier for the percentage of our salaries the MoD pays for our pensions are actually too low. No civilian employer pays anything like this and we pay nothing (well, maybe the AFPRB abate our pay a little - but it is only a little). And that money is not at the mercy of the financial markets as we have a defined benefit scheme which can only be changed by legislation. Given that the Armed Forces have a few friends and a pretty good rep I know which one I would rather take my chances with.
Now it happens that our employer can no longer afford to pay quite such staggeringly generous amounts, and Lord Hutton (a Labour peer by the way) has told them that they shouldn't be trying to any more. So we are going to get less in future, which isn't great, but we need to wake up and smell a bit of coffee here. I've noticed the world economy teetering on the brink of disaster, which is a teeny bit relevant. We have been told that those currently serving will keep whatever benefits they have earned from the current scheme, and maybe this new '10 year' promise will make things less painful still. And you can be damn sure if you jump ship over this, the new deck you land on will be lower than the one you left.
Happy retiring!
Now it happens that our employer can no longer afford to pay quite such staggeringly generous amounts, and Lord Hutton (a Labour peer by the way) has told them that they shouldn't be trying to any more. So we are going to get less in future, which isn't great, but we need to wake up and smell a bit of coffee here. I've noticed the world economy teetering on the brink of disaster, which is a teeny bit relevant. We have been told that those currently serving will keep whatever benefits they have earned from the current scheme, and maybe this new '10 year' promise will make things less painful still. And you can be damn sure if you jump ship over this, the new deck you land on will be lower than the one you left.
Happy retiring!
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Retiring 2012 / 2013 on 05 scheme - good news!
Just read the latest edition of Pennant the magazine of the Forces Pension Society. On page 26 there is an article on "Dynamising" basically it explains how due to the lack of any current salary increases for serving members, those members retiring 2012 / 2013 could find themselves in a "Pension trough" and how the FPS has managed to negotiate the same increases in their pensions that individuals who retired before the pay freeze are entitled to. So you may not be getting a pay rise whilst still serving but you're pension is rising. Unfortunately I can't get a copy of the article, but if you are retiring in the next 18mths or so then this article will make pleasant reading! Well done to the FPS
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I am very worried by all of this. My 16 year point is 2017 so I was going to leave at aged 38 and become a teacher with the pension topping up the wage. If the pension changes in 2015/16 this would cost me many thousands of pounds. The only hope I have is I will still get an IP at my 16 year point but only 14/16. I think it will be very harsh for them to say I wont get anything for another 30 years. If this is the case and it is released next year I will go asap.
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Lunch
What the article is saying is that an individual who left on "05" scheme full pension in 2010, would be entitled to an annual CPI rated pension increase in both 2011 & 2012. So his pension will be more than another individual retiring at the end of March 2013, creating a "Pension Trough" for the later retiree. The FPS has convinced the MOD to introduce "dynamising" into the scheme thus protecting personal who retire in the period 2011 - 31 Mar 2013
So a Sqn Ldr who retires on 31 Mar 2013 would retire on a salary of £56,500 the same salary as a Sqn Ldr who retired in late 2010 but who is benefitting from the increases of CPI inflation in 2011 & 2012, so his actual pension will be more than the Sqn Ldr who has retired 2 years later.
He quotes an inflation increase of 3.1% in 2011 & a estimated increase of 3.9% in 2012, on a compound basis this would be a 7.1% overall increase, and a gives the later retiree a "new salary rate of £60,523. This means our Sqn Ldr will receive terminal benefits 7.1% greater than otherwise have been the case."
Sorry if this hasn't made it any clearer but if you can IM me I will send you a photo of the article which hopefully you can expand and read. The other option is to join the FPS at £16 a year and read the article online.
What the article is saying is that an individual who left on "05" scheme full pension in 2010, would be entitled to an annual CPI rated pension increase in both 2011 & 2012. So his pension will be more than another individual retiring at the end of March 2013, creating a "Pension Trough" for the later retiree. The FPS has convinced the MOD to introduce "dynamising" into the scheme thus protecting personal who retire in the period 2011 - 31 Mar 2013
So a Sqn Ldr who retires on 31 Mar 2013 would retire on a salary of £56,500 the same salary as a Sqn Ldr who retired in late 2010 but who is benefitting from the increases of CPI inflation in 2011 & 2012, so his actual pension will be more than the Sqn Ldr who has retired 2 years later.
He quotes an inflation increase of 3.1% in 2011 & a estimated increase of 3.9% in 2012, on a compound basis this would be a 7.1% overall increase, and a gives the later retiree a "new salary rate of £60,523. This means our Sqn Ldr will receive terminal benefits 7.1% greater than otherwise have been the case."
Sorry if this hasn't made it any clearer but if you can IM me I will send you a photo of the article which hopefully you can expand and read. The other option is to join the FPS at £16 a year and read the article online.
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JTO,
It's all to do with the way that your Final Salary is calculated under AFPS05. When 05 was being formulated, the FPS lobbied that it should be "dynamic" over the last 2 years. As I understand it, this principle was adopted by the MOD/government and written into AFPS05; but AFPS75 remained unchanged.
As far as I can make out, when you retire as a member of AFPS05 your pension is worked out as follows:
The downside is that, if the Armed Forces were to receive an above-inflation pay rise after the pay freeze gets lifted (you can always dream - but it happened in the late 70s), then AFPS05 members retiring soon afterwards wouldn't see it reflected in their pensions.
It's all to do with the way that your Final Salary is calculated under AFPS05. When 05 was being formulated, the FPS lobbied that it should be "dynamic" over the last 2 years. As I understand it, this principle was adopted by the MOD/government and written into AFPS05; but AFPS75 remained unchanged.
As far as I can make out, when you retire as a member of AFPS05 your pension is worked out as follows:
1. Your best consecutive 365 days of salary over the last 3 years is established.
2. That figure is then rolled back 2 years to remove military pay rises received during that period.
3. Finally, the result is increased by the famous CPI figure that all pensioners received during the last 2 years.
So anyone on AFPS05 retiring over the next couple of years will be better off than they expected. 2. That figure is then rolled back 2 years to remove military pay rises received during that period.
3. Finally, the result is increased by the famous CPI figure that all pensioners received during the last 2 years.
The downside is that, if the Armed Forces were to receive an above-inflation pay rise after the pay freeze gets lifted (you can always dream - but it happened in the late 70s), then AFPS05 members retiring soon afterwards wouldn't see it reflected in their pensions.
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Dynamising
The 75 scheme works on pension codes and pension codes are linked to pay. Thus when inflation runs ahead of pay rises, like now, a pension trough occurs.
When MOD were designing AFPS 05 the Forces Pension Society put a lot of pressure on MOD to build in a mechanism which would afford some degree of protection against pension troughs.
In the 05 scheme you work out pension based on Final Pensionable Pay. That is worked out by going back three years, inflating pay more than a year ago by inflation, and looking at which are the best 365 days consecutive pay. In 'normal' times, the best 365 days pay will be the final year - but these are not normal times.
When MOD were designing AFPS 05 the Forces Pension Society put a lot of pressure on MOD to build in a mechanism which would afford some degree of protection against pension troughs.
In the 05 scheme you work out pension based on Final Pensionable Pay. That is worked out by going back three years, inflating pay more than a year ago by inflation, and looking at which are the best 365 days consecutive pay. In 'normal' times, the best 365 days pay will be the final year - but these are not normal times.
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Thanks for the extra info, but I still have one question that I would like the answer to. So if "dynamising" is going to increase the pensions of those retiring in 2011 - end of March 2013, will it also increase the lump sum by the same ammount, or is it just a pension increase?
I am getting wishful here rolleyes:
I am getting wishful here rolleyes:
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Sloppy,
Sorry - no idea! Dynamising pensions is pretty normal - pensions are calculated by adding superannuable income and multiplying it by a factor. That Dynamising Factor (the DF) is then applied to each year’s earnings to take them up to a current value. For example, a factor for 1980 might be 5 (+). So someone with earnings of £20,000 in 1980 would equate to £100,000 (+) in today’s terms.
Patricia Hewitt got dragged over the coals by GPs a while back in respect of her buggering about with their DF - I think I'm right in saying that the GP factor is currently CPI +1.5% per annum. But what FPS has been doing recently is something I'm not familiar with at all, sorry. Having said that, it knows the scheme inside out so I'm sure they're lobbying with guile and insight!
FPS - £16 pa - bargain.
Sorry - no idea! Dynamising pensions is pretty normal - pensions are calculated by adding superannuable income and multiplying it by a factor. That Dynamising Factor (the DF) is then applied to each year’s earnings to take them up to a current value. For example, a factor for 1980 might be 5 (+). So someone with earnings of £20,000 in 1980 would equate to £100,000 (+) in today’s terms.
Patricia Hewitt got dragged over the coals by GPs a while back in respect of her buggering about with their DF - I think I'm right in saying that the GP factor is currently CPI +1.5% per annum. But what FPS has been doing recently is something I'm not familiar with at all, sorry. Having said that, it knows the scheme inside out so I'm sure they're lobbying with guile and insight!
FPS - £16 pa - bargain.
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Armed Forces Pensions
I can confirm that, when the pension is dynamised, the lump sum is three times the higher amount.
The only times I can think of that the lump sum is not three times the pension are:
- if an AFPS 05 lump sum is inversely commuted (given up in favour of an increased pension);
- if an AFPS 05 pension has been allocated by the member for someone who is financially dependent upon him or her; and
- where a court makes an order following a divorce.
The only times I can think of that the lump sum is not three times the pension are:
- if an AFPS 05 lump sum is inversely commuted (given up in favour of an increased pension);
- if an AFPS 05 pension has been allocated by the member for someone who is financially dependent upon him or her; and
- where a court makes an order following a divorce.