Originally Posted by
the_worrier
Please bear with me...I left the Service with an AFPS75 immediate pension and elected to take full commutation. If I did re-join I will automatically join AFPS15, as I had no transitional protection during switch over from AFPS75 to AFPS15.
On re-joining, assuming my pay is even slightly higher than it was when I retired (at same rank it will be due to annual rises for inflation), I will have to re-pay the commutation lump sum I received when I originally retired?
This amount is based on the difference between my original annual pension award and the amount I receive annually having taken full commutation? I will pay this for the duration of my new service until I have repaid the commutation lump sum or re-retire? What about the amount I have already 'forfeited' in the years between retiring and re-joining? (i.e. on retirement my pension award was £16,000 p.a. and after full commutation I receive £13,500 p.a, meaning I have 'forfeited' £2,500 per year for the years since I retired as 'payment' for the commutation lump sum I received).
I am contemplating re-joining but the loss of this (commuted) £13,500 p.a. pension and the need to re-pay the commutation gratuity (even assuming the amount already 're-paid' is taken off/into account) makes for a very unfavourable situation. Can the Armed Forces hope to achieve much success with recruiting ex-regulars back in?!
You need to remember that commutation is effectively a low interest loan to bolster your tax free lump sum, so if your abated pension is less than this amount then they will take it back from your pay. So in your case, if you are 100% abated then they will claw back that commutation loan from your pay. It’s a loan and so you must pay it back.
Don’t forget that ‘the package’ for being in the military is much more than the monthly pay - by far the biggest portion is the non-contributory pension that would cost the average Sqn Ldr around £3,500/month after tax. So you need to factor that into your decision process when you do your sums.
