BV, interestingly the report talks about enabling trading pay for pension for 'junior cohorts'.
2.34. Even our proof-of-concept analysis suggests places to start. The Armed Forces’ pension offer makes up 35% of the total reward expenditure. While we acknowledge it is not as flexible as other elements of the reward package, much more can be done to improve value for money and to move to a system that better incentivises at the individual and organisational level.
2.35. Given the comparatively little value placed on the pension by younger cohorts, there must be significant motivational impact and value for money to be gained by improving their understanding of what they really get. A personal pension value statement, along the lines of that produced for civil servants, would allow personnel to see the continually increasing value of their pension.
2.36. There would also be value in developing a model that allows more choice around pensions for junior cohorts. OR2 and OR3s account for 26% of Armed Forces’ reward costs. If, as our analysis suggests, they would prefer more pay to pension, there could be a win-win improvement in value for money. This should not be a cover to leave personnel without a good pension, but the current scheme is so generous that there seems to be scope for trade-off. A ‘pay in lieu of pension’ scheme has already been developed elsewhere in government and should be carefully considered here.