Death in Service Benefit

[MightyGem]

Appears to some good news here (http://www.news.mod.uk/news_headline_story.asp?newsItem_id=3163). Wonder if it's been backdated?

[teeteringhead]

Good news up to a point ..... IIRC coppers (the civil variety) get 5 x pension for death-in-service ... anyone able to confirm that ??

[Ginseng]

Seems like a bit of scope for confusion here. My understanding is that the Maximum Death-in-Service benefit to be offered as part of the new pension scheme is 4 x pensionable salary, but there has also been talk that the existing (AFPS75) rate may also be increased. The report here intially seems to refer to the latter, but then becomes confused with the former. Is this political double-speak on SofSs part, or genuine confusion by the writer of the article? Or, has the intended 4 x salary within AFPS05 become 3 X? Or, is the implication that those currently in AFPS 75 who elect to transfer to AFPS05 will only get 3 x as part of their transfer terms? Incidentally, if this refers to AFPS75, what happens to those who are currently paying extra for the AVC to increase 1.5 x to 4 x? I think someone has a bit of explaining to do!

Ginseng

(edited to repair typographical inadequacy!)

[MightyGem]

IIRC coppers (the civil variety) get 5 x pension for death-in-service ... anyone able to confirm that ??
My bobbies say that their wives get 2x annual salary plus a pension.

[round&round]

British military get 1.5 times salary unless we pay extra to get to 4 times.

Police get 2 times unless they pay extra to get to 7 times.

However, those doing the most dangerous job in the world of sitting in the House of Commons, eating hugely dangerous levels of cholesteral at lunch times whilst drinking incredible quantities of subsidized booze not only get the very best free pension scheme in the world but also enjoy immediate death in service benefits of 5 times salary.

Don't I just love being a high rate tax payer!!

Just look what happens when you vote in your own remuneration package. Dohhh

[D-IFF_ident]

As a subscriber to the FSAVCs I have an interest in the issue. To quote the article:

"In his opening address, the Defence Secretary announced an increase in death-in-service benefits under the current Armed Forces Pension Scheme."

So that sounds fairly simple. However,:

"Special arrangements are in place for those dying in-service between 6 April 2005 and 5 April 2006. In this case, the death benefits will be calculated on the better of the current and the new pension scheme arrangements, giving the best outcome for dependants. This is a transitional arrangement that recognises the fact that currently serving Armed Forces personnel will not be eligible for the improved death benefits offered by the new pension scheme until a year later than new entrants."

So now I'm a little confused.

A look at the full transcript of BuffHoons speach reveals:

"I am therefore pleased to announce that we have decided to increase the death-in-service benefit to 3 times pay for deaths from 6 April 2005 for all members of the current scheme."

http://www.mod.uk/issues/pensions/new_afps/currentvnew.htm

COMPARISONS BETWEEN THE CURRENT AFPS AND THE NEW AFPS.

Old scheme = Normally a tax-free lump sum of one year’s pensionable salary (1.5 X for attributable death in service).

New scheme = Tax-free lump sum of four times pensionable salary.

So that explains it then.

What about my FSAVCs? I can only assume that they will now worth a minimal increase in the lump sum, vice a substantial increase. Or do I get my money back?

[Ginseng]

You are right, he definitely said that Death-in-Service payments within AFPS75 would rise to 3 X pensionable salary from 6 Apr 05. As, like me, you are paying for the current AVC, you now have to ask your OC PSF what adjustment will be made to your monthly AVC payment so that, henceforth, it will only fund the extra 1 x salary (from 3 to 4). They cannot leave us overpaying, since it is against Inland Revenue rules for an AVC to be over-funded beyond IR limits. I bet this announcement will have caught everyone on the hop and nobody will be able to provide an answer. Let's make a Gentleman's agreement to ask the question and post the answers here.

Of course, if you transfer to AFPS05, your whole AVC becomes irrelevant and you should cease paying it. Will you get back what you have already put in? I'd like to think so, but I'm not holding my breath.


Ginseng

By the way, you refer to FSAVCs. The increased D-in-S benefit is via an in-scheme AVC, and therefore is not free-standing. For comparison, those who are paying to pension their flying pay are doing so entirely outside the AFPS, and hence that is a Free-Standing (FS) AVC

[Myra Leese]

All members of the armed forces will be entitled to 4 times salary for death in service from April 05 until April 06 regardless of whether they join the new pension scheme or not.; BFBS radio had a guy talking about it about 4 weeks ago. As I too pay extra AVCs I immediately contacted my PSF to find out if I would stop paying. Guess what? 4 weeks on and they still cannot give me an answer. As usual this seems to have caught the Adminers on the hop, I am thinking of asking again under FOI rules so should get a quicker answer!

[FJJP]

Myra Leese

I suspect the chances of you getting a CORRECT answer to a FOI question on this subject within 20 days is about equal to doubling the size of the Armed Forces next week...

[Biggus]

I suggest it would be quicker, easier, and you will be more likely to get a correct answer if you go to the pensions department direct - Glasgow? (0141 224 3600 or 94561 3600) After all your PSF are downstream of them anyway!

The people at Glasgow don't work weekends of course!

[Ginseng]

Four times? Really? Have you told SofS? He says it's three times. No wonder we are all a little confused. Perhaps he was thinking about AFPS05 and hadn't caught up with the fact that the original proposal for "three times" was increased to "four times" during the Commons Select Committee stage of the Bill (or the Act, as it is now). Whatever the truth, SofS's officials surely wouldn't allow him to be seen making incorrect or confusing statements, would they? And surely, they would have made sure that all the Service Personnel and Pension staffs were aware of the statement about to be made, and the implications, before it hit the streets, wouldn't they? And those staffs would have all the necessary answers to the obvious questions ready and waiting, wouldn't they? Dear me, I am feeling quite faint. I had better sit down.

Living in hope of greater clarity.

Ginseng

[D-IFF_ident]

Ginseng,

Dull of me to call them FSAVCs - had them too, but decided I was being ripped-off by the company I was paying.

I have written to Binnsworth to ask for clarification - since they are my parent unit.

Will post results when they arrive.

[Ginseng]

Sadly, you were advised correctly. The reason:

Your contribution rate was set as a percentage of your "actual rate of Military Salary" (basic pay) for the remainder of your Service.

The increased Death-in-Service Benefit that those contributions buy, within AFPS75, is a fixed multiple of your "Representative Rate of Pay", which is not the same thing and did not change when you became PA.

The future situation in AFPS05 might be different, but is actually irrelevant since you won't need this particular AVC in AFPS05.

Although, once started, contributions must continue until the end of Service, that does not necessarily prevent them being varied, or even Nil Rated, in my view, if the Defined Benefit that they were designed to buy is changed.

Off to lie down again now

Ginseng

[It's Life Jim 208]

Biggus

I followed your advice and rang the pensions office in Glasgow on Monday morning, guess what, they hadn't a clue what I was talking about when I mentioned AVCs and the SofS's speach of 14 Mar. The nice scottish lad at the other end seemed totally disinterested and advised me to write to them with my query.

Looks like yet another SNAFU from MOD, dazzle the press but don't tell anyone else. Ops Normal.

ILJ208

[Myra Leese]

I too called the number given and a very surly Scottish lass refused to answer my query on either the old or new pension schemes; she insisted I had to write or send an e-mail. I sent the e-mail on Monday and am still waiting for an answer.

Out of interest here is some information from a letter sent to me last year:

In view of the fact that PAS has subsumed flying pay into military salary, you are now paying higher monthly contributions because AVCs are based on a percentage of pay. In order to prevent you being disadvantaged by this change, an amendment has been made to the regulations for the Armed Forces Pension Scheme to explain that the Death in Service lump sum will now be calculated on actual Professional Aviator pay.

You are reminded that an option to buy the enhanced Death in Service lump sum, once signed, is final. Applications to withdraw from the scheme will only be considered if there is an unforeseen change in circumstances that would cause hardship to the member by remaining in the scheme.

I think that last sentence is telling as there is about to be a very large change in circumstances for us all. We wait with baited breath.

[Ginseng]

My apologies for missing that latest change, and for (temporarily) misinforming all you PA folks as to the latest position. Just goes to show how tricky it is keeping pace with all the changes, especially when they are not well-publicised.

For links to the emerging AFPS05, see my new thread of yesterday titled "AFPS 2005". The Pension scheme itself is due to be published as Statutory Instrument 2005 No 438, titled "The Armed Forces Pension Scheme Order 2005" (not yet available on HMSO website as I write).

Regards

Ginseng

[Biggus]

I too phoned Glasgow, but got a far more helpful response than some other posters. Although they couldn't answer my question immediately they took my number and got back to me within a few hours. I was told that although policy had yet to be formally approved the expected way ahead was to cease death in service benefit AVCs. If you are already in the scheme your payments will cease from Apr 05 on, but there will be no refund of contributions already made.

The aim was to impliment this policy as soon as possible. However, if money was still deducted after April it would be refunded. Those in the scheme already would be written to explaining the change.

Anyway, that is what I was told, which doesn't actually make it gospel. But I offer it up for your consideration!!

[D-IFF_ident]

Well it's April 05 by my calendar, and I've heard nowt back from Bluntsworth.

[YellowBelly]

Biggus

We've been told the same thing by our handbrake house. Looking forward to the additional pay rise.....

[Ginseng]

Thanks for that. I must admit that I haven't yet got round to tackling this myself. The answer that you have been given certainly seems to be fair and consistent with the following relevant QRs:

3226: Contributions are made on an insured basis, and will not be refunded nor will any transfer value reflect such contributions.

3227: The enhancement will be the difference between all normal Armed Forces Pension Scheme lump sums and four times actual earnings at death.

3229: An option to buy the enhanced death in service lump sum once signed and accepted is final.

Note : There have been some very rare exceptions. These have occurred when terms and conditions of service have been changed by the Department in such a way as to reduce the headroom for the individual to use AVCs to purchase additional benefits; and where the change has been beyond the individual's control, and was not foreseeable at the time the AVC was taken out.

3227 was amended to its current form at AL9, Feb 04, which seems to cover the change for PAS. All Italics are mine.

Regards

Ginseng

[Ginseng]

The tangled web gets even worse.

From the new AFCS booklet "Your Compensation Scheme Explained".

Page 16 - Bereavement Grant. ....... "If you die in service, the following provisions apply, reflecting the different levels of death-in-service benefits paid under the two pension schemes. " (Italics mine).

Page 30 - Comparison of benefits payable on death due to service - Attributable benefits under AFPS 75 and WPS. Death-in-service lump sum of up to approx 3 times pensionable pay. Note 6. The lump sum is increased to approx 3 times pensionable pay with effect from April 2006.

So perhaps it is 3 times rather than 4 times, and from April 06 rather than now. And what does "approx 3 times" mean? And what did the SofS actually say? What did he think he said? What was he reported as having said?

Does anyone know what is going on?

Oh dear, oh dear, oh dear. What a shambles!

Ginseng

Here's a thought. Perhaps it all means that the Death-in-Service Benefit in AFPS 75 remains at 1 to 1.5 times until Apr 06, but in the meantime they will actually pay 4 times (to equal AFPS 05), until transfer day in Apr 06, when those transfering to AFPS 05 will keep their 4 times, but those who don't and remain in AFPS 75 revert to AFPS 75, which on the same day has been raised to 3 times, so in effect they see a drop from 4 times to 3 times, which is still better than 1 to 1.5 times and its all their fault for not accepting the offer of transfer anyway.

I think my brain has just exploded!

Ginseng

PS: What would all that mean for our AVCs?

[Ginseng]

After a bit of digging, it appears that my last post was pretty close to the truth. The current situation appears to be that the D-i-S Benefit within AFPS 75 has been raised to 3 times pensionable pay from Apr 05. Meanwhile, as an interim measure for Apr 05 to Apr 06 only, for death in that period the AFPS benefits for members of AFPS 75 will be calculated as the best of AFPS 75 or AFPS 05; in effect they would almost always be based on the 4 times pensionable salary given by AFPS 05. Hence, for that transitional year, your current AVC would buy no extra benefit. From Apr 06, you will either have transfered to AFPS 05, and hence your AVC would be unnecessary, or you would remain in AFPS 75 with the "3 times". Your AVC would presumably then need to be reassessed (if it is still allowed). What exactly will happen on the AVCs from now on remains unclear at the moment.

Ginseng

[Ginseng]

If you are trying to say that the announcement of these policy changes was handled in a sloppy, nay shambolic, fashion then I could not agree with you more. The MoD had months to see this coming and prepare to have the answers ready. Words fail me.

Regards

Ginseng

[Ginseng]

Source: Internal Briefing Note 2005/19 dated 7 Apr 05.

From 6 Apr 05, D-i-S Benefit in AFPS 75 raised to 3 times Representative Pay.

For the year 6 Apr 05 to 5 Apr 06 only, for a death in service dependants benefits will be calculated on both AFPS 75 and AFPS 05 terms, and the best of the two paid.

Current D-I-S AVC premiums in AFPS 75 will be suspended for that year only.

From 6 Apr 06, those who remain in AFPS 75 will have their premiums reinstated at one-third of the current rate, to reflect the smaller gain to be bought.

It may take until end Sep 05 to stop and reimburse AVC premiums for 05/06

There you have it in a nutshell, at last

Regards

Ginseng

[Ginseng]

Didn't you know you were supposed to be a mind reader?

Futher info:

There are also 2 improvements to the War Pensions Scheme for war widows and widowers whose spouse died before Apr 73, with effect from 6 Apr 05:

An increase of £2 per week in the Supplementary Pension, over and above inflation,

in future, the war pension will not be lost on remarriage or cohabitation.

All the improvements are paid for by:

Raising the preserved pension age, for all preserved benefits earned by service after 6 Apr 05, to age 65 from 60.

Ginseng

[4fitter]

Ginseng, thanks for all your efforts.

Despite the best efforts of my clerks, calls to Binnsworth, our parent unit, was you'll have to call Glasgow.

Call to Glasgow met with sullen Scottish lassie who denied all knowledge of any pensions revisions !!

Gave her the link to SoSs statement in the House which was met with " Well why didn't you do it"

End Result:

1.Ginseng saves the day.

Ginseng, thanks for all your efforts.

Despite the best efforts of my clerks, calls to Binnsworth, our parent unit, was you\'ll have to call Glasgow.

Call to Glasgow met with sullen Scottish lassie who denied all knowledge of any pensions revisions !!

Gave her the link to SoSs statement in the House which was met with " Well why didn\'t you do it"

End Result:

1.Ginseng saves the day.

2. I reluctantly abuse my rank and advise sullen lasses boss that if I get this sort of service what can my lads and lasses expect - apology expected in writing.

3. Binnsworth to be reminded that one stop shops means they do the research and leave me and my staff to get on with our primary duty.

4. Notice in SROs that all staff are to contact Chf Clk Binnsworth for further advice.

5. Soon to be social call on serious grown up where opportunity taken to advise that advice obtained from PPRUNE rather than the experts. What the hell will happen when we all have to call Glasgow for pers/allowances advice.

[Ginseng]

Thank you for the praise.

To be honest, apart from the odd piece of speculation whilst awaiting further information, all the information I have passed on has been drawn from official sources open to public view, or from MoD internal material prepared for release to all members of HM Forces. Main sources have been:

Hansard, via the UK Parliament website,

Queen's Regulations, Admin APs etc, via the Defence intranet, RAF Portal etc,

MoD internet site

Defence Internal Communications Briefs,

and sundry others.

All of which goes to prove that the information is there, but you have to dig for it. The MoD should seriously consider whether it has communicated these issues very well, beyond selling the positive aspects of the "Armed Forces Pension Scheme for the 21st Century". If I am honest, I am sad that PPrune should need to be the vehicle for getting this information to a wider audience, but nothing else seems to have been very effective. If I have helped a little, then I will take pleasure in that.

Regards to all

Ginseng

[4fitter]

Ginseng,
I acknowledge that the info is there but do we have the time to find it.
I am more annoyed for SAC Snooks and Cpl Smith that if I get the bums rush, what will they get ?
Customer service ! The social call awaits.

[Ginseng]

Point taken. Glad I haven't got your job.

Apologies to all for one slip up. The effective "service from" date for raising of the preserved pension age is 6 Apr 06, not 6 Apr 05 as I stated. Nobody's perfect ...................


Ginseng

PS: The briefing note is, as I said, dated 7 Apr 05. As far as I could tell it only appeared on the Defence intranet in the last 36 hours or so, and I have not seen a paper copy. Says it all ............

[Ginseng]

JSP 764 is now on the MoD website (see my posts at the thread "AFPS05".

On AVCs, it confirms that those apaying D-i-S AVCs in AFPS75 will have their premiums stopped if they transfer to AFPS05, but will receive no refund of past premiums because of their "insured" nature.

Of interest, if you are paying for other"in-scheme" AVCs in AFPS75, which were designed to produce a monetary benefit in your pension, which are no longer required once you have transfered to AFPS05, then at transfer you will be allocated extra notional years of service in lieu of refund of your past premiums. This is very welcome news - not that it affects me.

Still digging

Regards

Ginseng