I know that this is initially off topic wrt to pension, but please stay with me...
I found Tourist's comments articulate and well considered. It was clear that he meant no offence to anyone and I think it is a shame that not everybody can understand his point.
you don't have to accept second best.
chappie, this is certainly not an attack; I'm just trying to draw an analogy that puts this in a slightly different perspective. Let's all move away from aircraft for a moment and look at cars. Should one constantly upgrade one's car to get the latest greatest safety features? You know, not just driver's airbag and ABS (as on my tatty old Mondeo), but the full wrap-around airbags for everyone; automatic wipers and lights; GPS-linked emergency transmitter; drive control computer etc etc? Very, very few people can financially afford to keep up with the innovations and accept an increased risk by not taking the latest and greatest safety features. In short, most people accept second best (or worse). Now, one may argue that the difference between the simple analogy and the complexities of the military risk decisions is that a car owner has the power to conduct the risk analysis themselves whereas, for us poor military types, the decisions are made by people much further up the chain than us. Except that my kids don't get to decide which car I own or whether they ride in it or not - I make the decision and they get in the car!
Tourist is correct in that any costs and payments made as a result of legal approaches does come directly from the defence budget - no other part of goverment comes forward to pay the bill. Each year, the MoD tries to estimate how much it will be sued for and puts aside cash for it. If settlements and costs are higher than the estimate, it cannot be taken at risk and saving do have to be made from other Top Level Budgets (TLBs). Those in the military only need to think back to the year most of the pregnant dismissals cases came to court to be reminded how the estimates were off and TLBs had to share the pain. Over estimates never seem to happen and as the money has to be held back from military effect spending, who would want to over estimate?
If relatives (for any reason, nit just the tragic loss of XV179) feel that compensation claims are in order, they should proceed, after all, this is a free(ish) country and they are entitled to approach the courts. Heck, the lawyers would claim that it's not just an entitlement to go to court, but a relative's duty (but then lawyers have a vested interest as they win regardless of the decision!) This is exactly the same as in the civilian world where, as Winco pointed out only too well, the employer has the responsibility to cover the costs. The difference is that Winco would not also supply a pension for life on top of any compensation.
It used to be that military families accepted that the job they volunteered for was dangerous and accepted that in the event of the unthinkable, the goverment would pay a pension. There was no such provision for civlian employment. Then we evolved in to the litigious society that we have become and the civilian workers realised that the only way to get a payout was through legal action. The clause in the pensions issue addresses a 'cake and eat it' by allowing the goverment to avoid paying out twice. Like Grum Peace Odd, I believe that the upshot of this is that any compensation claims in the future will be adjusted upwards (thereby blowing the current estimates and causing cuts to the TLBs) to offset the possibility of a reduced or removed pension, making it, effectively, one helluva commutation.
And no, I have had nothing to do with this pension decision, nor the sort of risk management decisions that put us in danger. I have, however, been in a position to sue the MoD in the past and elected not to because a legal right is not the same as a moral right and, in my case, the two did not coincide.