Service Pension Reduction

[Al R]

Mudge,

In fairness to them, they administrate pension payments and aren't pensions experts. When you joined up, by default, you became a member of AFPS and as a consequence, were contracted out of SERPS or the State Additional Pension scheme. That was the law at the time (it goes back to when National Insurance was first introduced) and it meant that you couldn’t get the additional pension benefits because you were contracted (or ‘opted’ out of it). As a result, you and the RAF paid lower National Insurance contributions and in return, AFPS trustees agreed that you would receive a military pension no less than the Guaranteed Minimum Pension (GMP) from State Pension Age. GMP was more or less equivalent to the State Additional Pension given up, and the State Additional Pension paid by the State had the GMP knocked off.

However, back in 1948, theGovernment also wanted to make sure that you did not earn two benefits for the same period of service. Simply put, you couldn't be entitled to a GMP and an additional state pension benefit - it'd be like getting flying pay whilst being on PA Spine. So, the service pension/GMP deductions that are catching up with you and which you are currently being pinged with is what you are complaining about (I assume).

But its not all that bad. The good news is once these deductions have been applied, they remain at the same level each year. So as your pension increases, they will take away an ever smaller proportion. Back in the day, you had options (opting out of AFPS would have been the most drastic!) and you could have asked to pay your extraNational Insurance Contributions (thereby compelling the RAF to pay extra too) to remain in the Various guises of State Additional Pension Schemes (ie; not contracted out). However, those types of occupational schemes which left employees and employer paying higher NI contributions for the full Additional State Pension, generally had a less generous pension structure ie; a smaller final salaryaccrual rate.

So, in summary, you got a benefit when you started 'saving' via AFPS and if you live long enough, you're quids in again! For a more leisurely belt and braces explanation, have you tried the Forces Pension Society?

Forces Pension Society - Fighting for the Forces and their Families