AFPS 75 and NEM

[Whenurhappy]

I've been speaking to several colleagues who, like me, are long in the tooth, but still have sufficient time left to serve for several years under the proposed New Employment Model (to be introduced, it seems, from 2015).

A colleague posed the question to SPVA asking whether this would affect his entitlement to his AFPS 75 pension; regretfully SPVA where unable to give a categorical assurance that the entitlement would remain - or whether it would migrate to NEM (with pensions deferred to 65). SPVA claimed in writing that the MOD had not provided any more detail on NEM. I understand that the Forces Pension Society are in a similar boat. Previous advice suggested that those born before 1 Apr 1967 would have their entitlement unchanged, however SPVA cannot/will not confirm that entitlement now, without using very cautious and very conditional language eg 'may', 'might' 'should' etc.

Thus, although not looking for penisons advice, and given that many middling rank personnel (principally officers in the RAF and RN) are being offered substantial extenstions, does anyone know with any certainty what will happen to pensions of SP on AFPS 75 who are serving, but 47 or older at the moment?

[fawkes]

I have been wtaching this keenly - I missed out on having my pension protected by 60 days. My understanding is that whilst the NEM may come in on time in 2015, it is (looking at the implementation of the AFPS 05) unlikely that they will be able to do the same for the pension scheme. New joiners won't be so fussed as that is all that is on offer.

This should leave plenty of time to see which way the wind blows and whethe there is any benefit in hanging on.

I am given to understand for those without preserved pension rights there will be two pensions - that earned under AFPS 75 up until the start of the new scheme and that from the start of the new scheme until retirement.

[getsometimein]

Everything I've seen says that those within their last 10 years as of the introduction will remain on their previous pension scheme.

[junket]

NEM is not the new pensions scheme, FAFPS is. You would probably get better clarity if you divorced the 2 and treated FAfPS as an individual entity. NEM is a look at ur complete offer in terms of service (housing, pay, allowances etc)

I think you concern centres around how protected is your afps 75 pension post 2015? Have a good read of the blurb that is out there as it is reasonably well explained. In essence, you retain your rights to any gratuity and pension on the 75 scheme until you retire and collect the gratuity on departure and your pension at 55. However from 2015 you cease accruing 75 pension bits and start accruing new pension bits on the new scheme (afps 15?) and will collect this at age 60 ( I think). In essence you will get 2 pensions, one at 55 and one at 60. If they amalgamate into one payment I am unsure. Bottom line you will still get your gratuity and immediate pension on the 75 scheme, just that it will be a tad less post 2015 as you start the new scheme then. Hope that makes sense. If you were 45 on 1 apr 12 then ignore the above as you will stay on the 75 scheme until you go.

[Jacks Down]

The only thing Junket has missed is that if you are on AFPS 75 now your final pension will still be based on your rank on retirement, even if you are promoted after AFPS 15 comes in.

[Union Jack]

Thus, although not looking for penisons advice,

.... otherwise you would presumably have posted on the Medical & Health forum.:)

Please note that I delicately refrained from raising this until you had received some properly informed responses.

Jack

[Whenurhappy]

Yes - I will write to SPVA divorcing NEM from the new pension system, but at present they don't seem to have enough information to answer anyway! Thanks for the responses.

[Whenurhappy]

I understand from SPVA now that any SP within 10 years of their normal retirement date wef 1 April 2012 will not be transferred to the Future Pension Scheme (as distinct from the New Employment Model) thus benefits will be paid iaw current rules. Unfortunately, this has not been well communicated to those not on a normal unit and without regular DII access - albeit the latter a blessing in disguise! Moreover the use of conditional language from SPVA remains a continued source of concern.

[Lima Juliet]

I heard a good rumour that NEM might allow you to borrow early against your FAFPS or AFPS05 Early Departure Payment (EDP) lump sum by up to 50% of your salary or £25k (max) to use as a deposit for a house. Now that would be useful as you would effectively tie part of your future lump sum to the housing market at a time of your choice and reap maximum benefit when house prices soar again (and hopefully will!).

Warning - Just rumour and hearsay from a mate in Air Cmd, though... (But a trusted source).

LJ

[5 Forward 6 Back]

Whenurhappy; 10 years of which retirement date? Wasn't this the case anyway, but only for those with less than 10 years to run to 55?

My retirement date's my 38th birthday, and I'm much closer than 10 years to that. However, I thought I was going to have to accept AFPS75 benefits up until 1 Apr 15, and then FAPS benefits from 1 Apr 15 - IRD.

[Justanopinion]

The key points:

KEY POINTS

• The FAFPS will be introduced from Apr 15.

• The MOD and HM Treasury have reached agreement over how rights accrued under AFPS 75 and AFPS 05 prior to enrolment into the FAFPS are to be treated.

• Individuals who are enrolled into the FAFPS will have the value of the AFPS 75 or AFPS 05 pension benefits they have earned up to the introduction of the new scheme protected until they leave the Service. This includes the Immediate Pension, the Early Departure Payment and lump sum.

• These accrued rights will remain payable at the time they were expected to be paid under the existing scheme rules and will be linked to the final pensionable salary at the point the individual leaves the Service, not the salary at the time of transition to FAFPS.

• The Government has proposed additional transitional protection for those individuals within 10 years of their Normal Pension Age (NPA) (age 55 for AFPS 75/05) on 1 Apr 12. They will remain on their current pension schemes and their benefits will be unaffected by the introduction of the FAFPS. IBN 19/11 refers.

• Regular Service personnel aged under 45 on 1 Apr 12 will be automatically enrolled into FAFPS when it starts and any further pension rights they earn from that date will be under the new scheme. Enrolment will be mandatory; there will be no ‘Offer to Transfer’.

• Guidance on Accrued Rights for the other Armed Forces Pension Schemes will be issued in due course (Reserve Forces, Non Regular Permanent Staff, Full Time Reserve Service, Gibraltar Regt and Gurkha).

[5 Forward 6 Back]

That's what I thought; I'm one of these individuals with flaky DII access so wondered if I'd missed something!

I'm still convinced that those of us with a few years to run to IPP could "win" overall with FAPS. A career average scheme based on a higher salary, plus all my old AFPS75 benefits frozen at 14/16th, but still uplifted to my eventual final salary too?

[junket]

Leon, absolutely spot on. Have seen the paper on this and it was briefed at CAS Round table. Other options included as well which makes house purchase far easier, especially when linked with the chancellors recent announcement

[Sloppy Link]

5F6B,
Your retirement date is not your 38th birthday, it is the last day you can normally serve, generally this is your 55th birthday but it may be later if you joined slightly later in life. You are referring to your Initial Pension Point.

[Backwards PLT]

Great summary by justanopinion. Just to clarify pt6 though, in case someone misinterprets it:


Regular Service personnel aged under 45 on 1 Apr 12 will be automatically
enrolled into FAFPS when it starts and any further pension rights they earn from that date will be under the new scheme. Enrolment will be mandatory; there will be no ‘Offer to Transfer’.


"from that date" refers to when FAFPS starts (currently assumed as 1 Apr 15 but I guess could slip), not 1 Apr 12.

[5 Forward 6 Back]

Sloppy,

I thought my IPP was after 16 years service; which for me, falls before my 38th birthday. In this case, isn't the 16 year point your IPP (as per the recent change to FRI3), and your 38th birthday your IRD?

[VinRouge]

What happens if you refuse to enrol?

[TwoTunnels]

B PLT- No, the 'date' is Apr 12.

VR- I don't see how you can refuse to enrol?

[junket]

VR, you can't. All pension schemes cease and the new one starts

[Al R]

VinRouge

Believe it or not, you can opt out of AFPS completely (in favour of a private pension arrangements - if you wish) and get no benefits. You can also have AFPS and a 'Private' Pension (in fact, as many Personal/SIPP/SSAS pensions as you like). AFPS is still a good scheme so you'd probably be mad. AFPS 15 will benefit some people quite dramatically although you'll have to wait longer to get the better benefits and the consequences of the scheme cost cap being breached remain a worry. You wouldn't get paid more in lieu, but it'd be interesting to know if you can temporarily opt out and then back in though.

A couple of years ago, The Treasury floated the idea of allowing early access to pension savings. Why not have the choice of the first 4-5 years of individual contributions paid into liquid savings instead of AFPS, whereby a deposit can be accrued and then paid on trustee approval for something like a house deposit? Retirement isn't what it used to be, and neither should it be funded in a dogmatic and prescriptive way - although for practically everyone, intelligently maximising the impact of occupational and/or alternate pension benefits will form the core of retirement planning.

edit:

http://www.hm-treasury.gov.uk/d/call_for_evidence_on_early_access_to_pension_savings.PDF

[VinRouge]

Would you get any payrise if you did opt out completely Al?

[Al R]

It is declared non contributory, so no, you'd not get extra in lieu.

[Hueymeister]

The implications for PA Spine still not clear...

[Just This Once...]

Surely those on PA Spine will get 1/47th of their career average per year like everyone else?

I know PAS is not as attractive as the original 'gp capt on appointment plus the AFPS05 win' that some achieved, but it should be ok on FAFPS - as long as you can stick it to at least 55.

[Backwards PLT]

TwoTunnels- no, the date in that sentence is when FAFPS starts - 1 Apr 15. Glad I posted now as there clearly is some confusion!

[Chinny Crewman]

I think there may be some confusion with regards to dates on this thread and what happens when. My understanding having read the relevant leaflets is this;
Anyone aged over 45 on 1 Apr 12 will remain on their current pension scheme (75 or 05) until they retire, their benefits are unchanged. Everyone else will automatically transfer onto the new scheme on 1 Apr 15 (current planned introduction date) and pension rights accrued on their old scheme up to that date remain payable when you retire.

[TwoTunnels]

Chinny, that's how I understand it as well. Maybe I confused myself with my last post!

[Just This Once...]

As for the confusion - count me in. Going to be interesting playing with the calculator next month and I understand that it should go live for everyone else in June.

[Justanopinion]

2012DIN01-063: Pension rights accrued under AFPS 1975 and AFPS 2005

This document explains, with examples, how the transition will work.

From 1 April 2015 you will be accruing the new pension scheme.

Having been on 75 or 05 you will still retire on the same benefits of that old scheme i.e. you would retire with the appropriate tax free lump sum plus pension based on rank (rank on retirement, NOT ON 1 APRIL 15). If you leave before age 55 you would receive an Immediate pension at Immediate Pension rate fixed until age 55. At age 55 the pension increased at an actuarially adjusted rate (based on CPI).

On top of this you will also receive the new pension - built from 1 April 2015 to the point of retirement - but from age 60.

[Backwards PLT]

I think we are all in raging agreement!

If they had just said within 7 years on 1 Apr 15 all the dates would be the same.

[Just This Once...]

Indeed, but 7 years does not sound like the promised 10 years protection so it went into the spin machine.

[iRaven]

Why can't I have 7 years on my existing extant pension before having to change to FAFPS? It all seems a bit unfair...









...oh, hang on, I remember now, life is like that... :(

[Hueymeister]

So do I have to wait until I'm 60 to receive my AFPS15 pension having been made to retire at 55?

[Backwards PLT]

Huey

No - FAFPS payments can be actuarially adjusted to start at 55 (ie you get less).

Alternatively there are strong hints that NEM will allow (force?) some (all on full service?) to serve until 60, but we won't know until it is announced.

[Hueymeister]

That's what I thought.....

But a military crammed up with 60 yr olds? Blimey!

[Uncle Ginsters]

We know about payment being "actuarily adjusted" but can anyone tell us just what that means? Unless I've missed it, it's not explained in any DIN despite being the answer to the major question on the minds of those looking to extend - just how much pension will I receive at 55?

Is it a product of future CPIs and thus incalculable or can we figure it out somehow? :confused:

[Justanopinion]

Hueymeister- Yes, you will have to wait till 60 to recieve the pension benefits built from 1 April 2015, however, from age 55 you will recieve pension from AFPS 75/05.

Please see this example from 2012DIN01-063: Pension rights accrued under AFPS 1975 and AFPS 2005 (google it, it's the first document you come to and explains it well)

Example 8 – Full Career Pension – Service person promoted
An OF-3 (Lt Cdr, Maj, Sqn Ldr) has 10 years of service at the point of scheme transition. At some point beyond this point he is promoted to OF-4 (Cdr, Lt Col, Wg Cdr). He leaves the Armed Forces after 34 years of pensionable service at age 55.
He will begin to accrue pension benefits under the terms of the Future AFPS from the date of transition.
He will be entitled to receive, as his accrued AFPS 75 rights, both a taxable Immediate Pension of around £13,800 per annum and a tax free lump sum of around £41,400 at the point of leaving the Armed Forces. This will be based on the final rank he achieves, OF-4 (Cdr, Lt Col, Wg Cdr).
His pension will be increased annually by the Consumer Prices Index.
In addition, the OF-4 will be entitled to pension benefits for the 24 years of pensionable service under the Future AFPS in accordance with the rules of that scheme. The rules of the new scheme, including when pensions will be paid, are under development.

So, as per the last paragraph, this individual will take home whatever 24 years worth of the new scheme is, but from age 60. This is in addition to the pension he/she will have been taking from age 55 (based on the 10 years served on the old scheme prior to 1 April 2015).

[Al R]

Ginsters,

Assuming you were preordained to live until aged 80 and your annual AFPS pension is £10,000 at aged 60.

If you wanted to bring that 10k forward to aged 55, the state won't pay you an extra £50,000 (£10,000 over 25 instead of 20 years). So, it makes a reduction in your annual payment to reflect that. The people who determine the theory behind the reduction are actuaries and work in the Government Actuarial Department.

These are the same people who also work out how much you can draw each year from a personal pension (referred to as 'GAD rates') if you don't wish to annuitise your 'pot' immediately. GAD rates don't apply if you wish to 'plunder' your pot as quickly as possible for any number of reasons and are able to go into for instance, flexible (and not capped) drawdown.

There are downsides to doing that, and GAD rates are not etched in stone; there are dozens of types of risks which apply; anything from political risk to investment risk.

Public sector pension schemes (http://www.gad.gov.uk/services/Occupational_Pensions/Public_sector_pensions.html)

Income Drawdown (http://www.gad.gov.uk/services/Pensions_Policy_and_Regulation/Income_drawdown.html)

RPSM09103590 - Technical Pages: Member benefits: Drawdown pension: Flexible drawdown (http://www.hmrc.gov.uk/manuals/rpsmmanual/rpsm09103590.htm#IDATZGNG)

Happy St George's Day everyone!

[junket]

Huey, less than 3% of military personnel stay till 55, so I doubt the age 60 aspect will be too much of an issue.

[Willard Whyte]

Anyone still concerned could always leave and get a real job - whilst drawing their hard won military pension (assuming it's the '75 version) on top of any wage packet.

[Al R]

Junket,

I can see that number rising if the 60 rule is applied. Why spend a few more years in civvy street at aged 55, in uncertainty and competing with change and alien market forces, when you can continue in an environment that you know and are already happy with, and in an occupational pension scheme that will typically benefit those who have already reached maximum achievement at the top of a career income ladder? For those people, AFPS15 could be the farewell icing on a career cake.

[Whenurhappy]

All in all, the changes to the pension have not been well communicated and are confusing, to say the least. Because AFPS 15 has been conflated with NEM, this has muddied the waters even more.

I would like to regard myself as reasonably well educated and again, reasonably savvy on financial matters, but it has taken a lot of letters and now appeals to the interweb to make sense of it all. I am aware of at least one SP who has lodged a Service Complaint at the poor service from SPVA and confusing messages that have been published (and I cite the interview with the Air Sec given in the RAF News in February, where he is (helpfully) quoted as saying that

...people will still be able to draw whatever pension they earn at age 55, although it will be reduced to reflect the fact that it is being drawn under the new scheme's Normal Pension Age.
Helpful? Correct? Qualified?

Like c 25 - 30% of the RAF, I am outside the Light Blue environment and similarly, like many others, not on DIIF so struggle to find the information that should be made available to all. Apparently SPVA direct enquiries to a clip on YouTube...

[Al R]

It is worth remembering that from April 2009, a former spouse or civil partner who is the beneficial subject of a pension sharing order (PSO) can take AFPS benefits at aged 55 and not 60, but will also experience the same form of actuarial reduction.

[Willard Whyte]

Once more in English?

[Al R]

Assuming your AFPS 'pot' was worth £200k, and that the court determined that 100% should be split equally between you and your former spouse/partner; although you might be able to start taking benefits from your £100k at 55, your former partner has to wait until aged 65. Although they were also given £100k worth of pension credit rights in the scheme, if they wanted to take those benefits at 55, there would be a reduction in their annual pension.

Department for Work and Pensions introduced legislation in 2009 to allow former spouses/partners to take reduced benefits at 55, but the guidance was interpreted wrongly by SPVA who believed that their pensions could be payable from age 55 without any actuarial reduction. This resulted in over 100 cases where former spouses/partners were paid a pension that was too big and which was originally the subject of mass reclaim action. However, after a bit of a tussle, the attempts to recover the money were dismissed (I can't remember the name of the MP who fought for that one).

The changes in 2009 were made because of this;

The Army divorcee and a pension battle that could cost the MoDmillions | Mail Online (http://www.dailymail.co.uk/news/article-483429/The-Army-divorcee-pension-battle-cost-MoD-millions.html)

(written as I watch The Good Wife!)

[Just This Once...]

There seems to be quite a bit more on NEM released to the senior wheels this week, with briefings to come this summer for the masses.

Not seen it in print but from the well-placed rumours I am not sure how it will work for the aircrew cadre, even with the tweaks that separate it from the ground branch NEM. We seem to be inventing a system to cure a problem the RAF does not have.

In my small world we are struggling to retain people to their pension points yet the major changes seem targeted to ensure that very few actually make it to that point.

Appart from 'Joint' becoming a four letter word anybody know why we intend to introduce a mini up-or-out system for aircrew when we crave experience and long retention periods with relatively low churn / IPS to save on trg costs?

[VinRouge]

What's the rumour wrt PA terms? Any chance of retention of flying experience instead of backstabbing to make a decent pension?

[Just This Once...]

PA terms seem to have survived but with talk of some of 'retention pay' being absorbed into the core 'plus' salary the difference between career spine and PAS is not as great. What is not clear is if the spine will take you through to final pension or see a forced exit under LOS30 as will happen to CS sqn ldrs.

[Whenurhappy]

Last September it was announced that the NEM proposals would go out for 'consultation' in March. Has anyone seen anything? (I'm in the blissful non-DII world). Part of the problem, I believe, is the lack of SQEP to work through the proposals and turn them into regulations and procedures. The proposal, for example, to offer assistance to get on the housing ladder is a great idea, but as identified by the Treasury way back in 2006, if you take a bite of the cake for housing, that's it - no more access to subsidised housing inside the wire - SFA or SLA and its derivatives. any use of subsidised accn at this point would be at the commercial rate. This, potentially poses enormous problems on posting, courses, short term attachments, overseas tours...

As I have posted somewhere here before, in 2006 DASA did some very interesting modelling on the affordability of housing around our post 2013 footprint. Basically, a lot of younger and/or lower rank personnel would have very long commutes, resulting in a measurable increase in fatalities through RTAs - and, sadly, there are very 'good' statistics that plot commuting distance against frequency of RTAs.

[Backwards PLT]

JTO

Can you post a few more details on the NEM rumours you have heard? It's hard to comment without knowing what you are talking about!

Thanks

[Reverend 71]

Whenurhappy,

If you do not have DII access try the Airspace website that is part of the RAF Community site as all relevant pensions announcements have been published there. Once on the site check under Horizons - Your Money - Your Pension and then use the link to the A1 Specialist Support Pensions page which mirrors that on the equivalent DII page on the RAF intranet site.

Reverend 71

[Just This Once...]

From what I heard the charges for SLA/SFA will be linked to the 'Tier' you are on.

The first 2 Tiers take you to the IPP/EDP and the 3rd Tier will take you through to final pension point. Early promotion can take you to a higher tier earlier than the rough blocks above. So during the early part of your career when you have less money and less stability the charges will be relatively low, but by the later part of a career with (allegedly) more stability the charges will be quite punitive to push people towards home ownership and off the patch.

I would guess that the advance of pay for a home purchase would push you into Tier 3 charges should you subsequently move back on to the patch.

[VinRouge]

Any chance the treasury will raise the threshold for LSAP prior to taxation. The amount currently offered is peanuts compared to your average 3 bed semi in the south.

[Whenurhappy]

Rev. - thanks for this. I'll try to get some more clarity there. Certainly, Manning staff weren't able to answer questions raised with my first posting; SPVA were spectacularly unhelpful to a colleague (see earlier reference to YouTube...)

[Melchett01]

The proposal, for example, to offer assistance to get on the housing ladder is a great idea, but as identified by the Treasury way back in 2006, if you take a bite of the cake for housing, that's it - no more access to subsidised housing inside the wire - SFA or SLA and its derivatives. any use of subsidised accn at this point would be at the commercial rate. This, potentially poses enormous problems on posting, courses, short term attachments, overseas tours...

We had a visit from CoS Pers a couple of weeks ago and during the Q&A session, the issue of housing came up several times. CoS Pers confirmed that the ability to get assistance with buying a house, possibly by tapping into your pension early, was being given very serious consideration.

The only problem being that any assistance would be a one time only offer and available only to those who have yet to get a foot on the property ladder. If you choose to buy in a location but then end up being posted to the other side of the country, you will either be expected to sell your house and move or become a weekly commuter. Additionally, if you have already bought your own place when any scheme comes in to force, to paraphrase the AM, well thankyou very much - you've done us proud, but there's no help for you.

So whilst I applaud any assistance for getting onto the property ladder, I can see this being littered with pot holes and poo-traps. What they are trying to do is incredibly complicated and effectively amounts to an attempt to synch NEM with AFPS15 and housing and Treasury regulations. I think there is going to be quite a bit of grumbling, especially amongst those who have already taken the plunge off their own bat and are then posted away from home.

[Just This Once...]

Any chance the treasury will raise the threshold for LSAP prior to taxation. The amount currently offered is peanuts compared to your average 3 bed semi in the south.

The amount I heard was 'up to £50k' but I have no detail on how the actual figure is derived.

[Climebear]

So during the early part of your career when you have less money and less stability the charges will be relatively low, but by the later part of a career with (allegedly) more stability the charges will be quite punitive to push people towards home ownership and off the patch.


More stability! I'm just about to have my 6th move in the 10.5 years since my IPP.

[Al R]

And with that in mind.. is the effect of volatility on a spouse's or partner's career also measured? The impact of a partner chipping in for the collective financial long haul will be more pronounced within service families seeking stability and less lofty rank aspirations. Can NEM also reflect and compensate for one person working harder for one meaningful income (instead of two good ones?) and a better single pension you'll pay more tax on? It isnt what you make, its what you keep.

[VinRouge]

Not to mention the effect of any future means testing of the state pension. Which if they work out the same as they have child benefit, will make earning a higher salary completely pointless for your retirement.

[Al R]

I'm glad that we now have a state pension that lifts most people above means-testing for the actual benefit and basing the weekly amount on NIC. But IDS is now suggesting (for that, read setting the scene) that the next generation of pensioners shouldn’t automatically assume the right to free bus passes, TV licences and help with heating bills.

Call me Dave told pensioners before the last election that the extra benefits were all ‘safe’; in fact, he actually said - ‘You can read my lips, that is a promise from my heart’. But IDS claims it was only an assurance that was valid until 2015.

If you want to be objective, you have to ask; should we exclude pensioners from the rigours of the recession or should we spread the pain a little? The hawks argue that baby boomers have benefited over the past 40 years and that the extra money has to come from somewhere. The state has removed the indignity of impoverished OAPs trying to scrape together a meagre income but the cost of that has been to the detriment of those who have accrued a decent NIC record.

But as a result of the new system, we'll have a first and second class state pension system, for sure. I’m not sure that that we should confuse that with, or be entirely pessimistic about saving elsewhere and in other ways for a state retirement income though.

[Onceapilot]

Forgive me Al, where is the future first and second class state pension on present politics? I am aware that I (and my wife now) have to all wait to age 67 (that is £50,000 she has lost by that age if I die before, a gross change since we planned our retirement) and, the qualifying years have risen to 35...GITS! Yes, bus passes, winter fuel payments etc will be means tested soon but, have they announced means testing for the basic state pension? They will, before 2015 IMO!

OAP

[Al R]

OAP

If you're approaching your state retirement age, an inconsistency based on age (the difference could be as few as a day or so seperating retirees) will drag on for years - pensions apartheid used to refer to defined benefit and defined contribution schemes.

The state saves close to £100 millions each year by not having to means test - aside from that, would it announce means testing for the basic benefit before 2015? I think they would be insane to want to do that. Oh, hang on.

Ian Cowie writes with admirable venon about pension apartheid.

pensions apartheid ? Telegraph Blogs (http://blogs.telegraph.co.uk/finance/tag/pensions-apartheid/)

[Onceapilot]

Thanks for the linky Al !

OAP

[Whenurhappy]

Any more update on NEM? I understand one proposal is to offer a cash incentive to serve abroad (how about paying a decent LOA these days?).

[Jacks Down]

No. The last update was this one from December last year.

https://www.gov.uk/new-employment-model

I would not be surprised if all was not well in NEM-land, given the paucity of comms and the fact the Defence Board have considered NEM since the December update but with no resulting announcements. The link mentions consultation in 'summer 2013' which gives plenty of wriggle room.

[Lima Juliet]

Here is an update from the .Gov website dated 20 May 13:

The New Employment Model for service personnel

The New Employment Model (NEM) signifies the government’s commitment to provide a modernised terms and conditions of service ‘offer’. It will be designed to meet the expectations of a generation that has yet to join, but will be designed in a way that continues to support and motivate existing Service personnel. It will, necessarily, be a long-term, incremental change programme. Although not part of the NEM, the Future Armed Forces Pension Scheme is linked to its development.

When the Strategic Defence and Security Review (SDSR) was published in October 2010, the Government made a commitment in respect of Service personnel to:

- ensure that service in the Armed Forces remains an attractive choice in a rapidly evolving employment market

- better balance the demands placed on our people and their families, providing greater domestic stability while continuing to support mobility where this is essential to defence requirements

We have completed Stage I (Concept Development) of the NEM programme and the concept has been approved by the Defence Board. We have now started the second stage, which involves designing the policy in detail. This stage will continue until April 2014.

We will start to introduce the new employment model by no later than April 2015, although it may be possible to introduce certain components beforehand. Full implementation is not expected before 2020.

The bit in bold is the only bit I didn't know.

LJ

PS link is https://www.gov.uk/government/policies/providing-versatile-agile-and-battle-winning-armed-forces-and-a-smaller-more-professional-ministry-of-defence/supporting-pages/the-new-employment-model-for-service-personnel

[Jacks Down]

LJ,

Thanks, but that's just a cut and paste from the MoD's December announcement, it's nothing new.

[Lima Juliet]

OK buddy, it definately says "updated 20 May 13" in the link - I wonder what they updated then? :confused:

Anyway, with 6.5 years to run to 2020 and final consultations expected to finish the best part of a year away, I suspect we won't hear much in the short term.

LJ :ok:

[junket]

NEM comms update due out in June. DIB, briefing given by chain of command, shortly followed by the start of the consultation until Sep 13. Stage 2 outcomes to DB in Apr 14. NEM is long term so expect phased roll out to coincide with JPA change windows.

[downsizer]

Remind me, is this NEM defence wide (meaning we're gonna do things the Army way) or is it just focusing on the RAF?

[Jacks Down]

It's defence-wide. The original basic concept was to produce a common framework across all 3 services, but within which each service could have their own variations to meet particular needs, if justified. How this will pan out in the final version I have no idea.

[Just This Once...]

DD, that sounds pretty bad.

To be honest I am having difficulty in understanding where the new (beta) calculator gets its figures from and I am concerned that it will give unreliable figures in some cases when it goes live in the next few days.

I do not think producing a calculator with heavy caveats over accuracy is good enough. Where else are we supposed to get decision-quality, formal and legally supportable advice from?

The Armed Forces Pension and Annual Allowance Calculator is for guidance purposes only. It is not intended to provide you with financial advice. If you require financial advice, you should contact an independent financial adviser. Your unit administration staff have a list of Services Insurance and Investment Advisory Panel (SIIAP) approved independent financial advisers, although you are free to use any independent financial adviser that you wish.

The calculator does not show dependants benefits, ill-health benefits, Reserve Forces, MPGS, AVCs, transfers in or pension sharing figures. In addition, the AFPAAC cannot give a forecast projection when qualifying service is different to reckonable service. The calculator will initially ask you to confirm which pension scheme you are in. The forecasts that the calculator provides are based on 2013 pension codes (for AFPS 75 members) and 2013 pay rates (for AFPS 05 members).

What will the calculator provide?

Transitional Protection
The Government has offered Transitional Protection for those who were within ten years of their respective scheme’s Normal Pension Age (NPA) on 1 April 2012. The Armed Forces Pension Scheme 1975 (AFPS 75) or Armed Forces Pension Scheme 2005 (AFPS 05) both have an NPA of 55. This means if you were aged 45 or over on 1 April 2012, you will stay on your current pension scheme and your benefits will be unaffected.
The new Armed Forces Pension and Annual Allowance Calculator (AFPAAC) will continue to provide a guide to the pension benefits you could expect to receive under AFPS 75 or AFPS 05.

Break in service
If you have any break in service prior to the 6 April 2006 and are entitled to a preserved pension, your forecast will be inaccurate and you will need to contact SPVA Mail Point 480, Kentigern House, 65 Brown Street, Glasgow, G2 8EX for a written forecast. Please note that this may also affect Annual Allowance calculation.

Armed Forces Pension Scheme 2015 and Accrued Rights to existing pension benefits
If you do not have Transitional Protection you will automatically transfer to the Armed Forces Pension Scheme 2015 (AFPS 15) on 1 April 2015. AFPS 15 that is based on a Career Average Revalued Earnings (CARE) pension (from 1 April 2015) rather than on final rank or salary. However, you will also have rights to pension benefits accrued as a result of your membership in AFPS 75 or AFPS 05. This means pension benefits already earned in current schemes, up to the implementation date of the new scheme, will be guaranteed. Service personnel will be able to draw these benefits at the same age as now (in accordance with current schemes' rules) and they will be linked to the final rank/pensionable salary at the date of leaving the Services - not the rank/salary at the time of transfer to the new scheme - thereby maintaining their final rank/salary link.(see DIN 2012 01-063, DIN 2012 01-175, DIN 2012 01-249 and DIN 2013 01-086 which include worked examples).
The new Armed Forces Pension and Annual Allowance Calculator (AFPAAC) will provide a guide to the pension benefits you could expect to receive under AFPS 75 or AFPS 05 and AFPS 15. Presently, the calculator cannot project a forecast for MODOs who are members of AFPS 05. Once the policy has been defined the calculator will be updated to provide forecasts.

Pension Tax - Annual Allowance
If you hold the rank of OF3 and above there is also an option to calculate your Annual Allowance (AA) and any unused allowance from previous years that you may be entitled to carry forward. The AA is the amount that an individual's pension savings can grow each year without being taxed and the current AA limit is £50,000. If you have exceeded the AA, SPVA will write to you with a statement. The calculator can only give an estimate on a complete tax year. Scheme Pays pension reduction is indexed linked and will increase each April in line with the Consumer Price Index.

Qualification for AFPS 15 Early Departure Payment
All continuous paid service in AFPS 75 and AFPS 05 will qualify towards an AFPS 15 EDP.

Aggregation of Previous Armed Forces Preserved Pension Awards
If you have rejoined the Armed Forces and have a preserved pension award you are entitled to aggregate your most recent previous preserved pension award with your current service. (This will only count for pension purposes, not for Resettlement Grant or Early Departure Payment (EDP).) However, you must apply to do so in writing, to SPVA, Pensions Division (Aggregation), Mail Point 480, Kentigern House, 65 Brown Street, Glasgow, G2 8EX before terminating your service. (page 21 of the Service Leavers Guide refers).

Aggregation of previous AFPS 75 service with a current period of AFPS 75 service
If you are a member of AFPS75, have insufficient service on your current engagement and have not opted to aggregate your previous preserved pension award with your current service you may not qualify for immediately payable pension benefits. You will only be entitled to a second preserved pension award.

Aggregation of previous AFPS 05 service with a current period of AFPS 05 service
If you are a member of AFPS 05 and are aged 55 or over on the date you leave service, and have not opted to aggregate your previous AFPS 05 preserved pension with your current service, your immediate pension at age 55 or over will be based on your current period of service only and your earlier deferred pension will be paid to you as a preserved pension at age 65. However, if you have opted to aggregate your previous AFPS 05 preserved pension with your current service, your immediate pension payable at age 55 or over will be based on your current period of service and your earlier deferred pension. If you leave service before the age of 55 with insufficient 'relevant service' for an Early Departure Payment, your previous preserved pension and current awards will be deferred until you are age 65.

Aggregation of previous AFPS 75 service with current period of AFPS 05 service
If you are a member of AFPS 05 and are aged 55 or over on the date you leave service, and have not opted to aggregate your previous AFPS 75 preserved pension with your current service, your immediate pension at age 55 or over will be based on your current period of service only and your earlier deferred pension will be paid to you as a preserved pension at age 65 (any service given prior to 6 April 2006 will be paid at age 60).

If you are a member of AFPS 05 and are aged 55 or over on the date you leave service, and have opted to aggregate your previous AFPS 75 preserved pension with your current service, your immediate pension at age 55 or over will be based on your current period of service and your earlier deferred pension and paid at age 55.

If you leave service before the age of 55 with insufficient 'relevant service' for an Early Departure Payment, your previous preserved pension and current award will be deferred until you are age 65. Please note that even if you aggregate a preserved pension awarded under the AFPS 75 with your current AFPS 05 service this is for pension purposes only.

Please note that, any previous service given before 6 April 2005 does not qualify as 'Relevant Service' and does not therefore count towards the Resettlement Grant or Early Departure Payments.

Resettlement Grants
Resettlement Grants are NOT being reviewed as part of the changes to the new pension scheme and there will be NO changes to the current Resettlement Grant system as a result of the transition to the new pension scheme.

Resettlement Grants are for all Regular Service personnel. Eligibility for a Resettlement Grant depends upon the date of joining the Regular Armed Forces as follows:

Those who joined on or after 6 April 2005
All Ranks need to have 12 years' relevant service (from date of entry). All service which has not been transferred under the OTT is excluded.

Those who joined before 6 April 2005 and took the Offer to Transfer to the Armed Forces Pension Scheme 2005 (AFPS 05) Terms of Service
All Ranks need to have 12 years' relevant service (from date of entry).

Those who joined before 6 April 2005 and did NOT take the Offer to Transfer to AFPS 05 Terms of Service
Officers - to have at least 2 years' Commissioned service and have 9 relevant years of reckonable service from age 21.
Other Ranks - to have 12 relevant years of reckonable service from age 18.

Opted Out AFPS 75 or AFPS 05
If you have opted out of AFPS 75 or 05 in favour of your own private pension arrangements, no pension benefits will be due under AFPS 75 or AFPS 05.

Disclaimer
Although every effort has been made to ensure that the information provided is as accurate as possible, no representation or warranty, express or implied, is given as to its accuracy and the MOD does not accept any liability for error or omission. The MOD shall not be liable for any loss or damage arising from the use of, or inability to use, the Pension and Annual Allowance Calculator, or any material contained in it, or from any action or decision taken as a result of using the Pension and Annual Allowance Calculator or any such material.
If you have Transitional Protection or are excluded from using the calculator you may contact SPVA in writing for one free a forecast per annum at the following address: SPVA Mail Point 480, Kentigern House, 65 Brown Street, Glasgow, G2 8EX

Acceptance
You cannot use the calculator unless you accept these terms and conditions by checking the ‘accept’ box below.

[JTIDS]

Any word on when the new pension calculator will actually go live?

[junket]

JTIDS 3 June

[JTIDS]

Thanks! I shall look forward to it with trepidation...

[Fire 'n' Forget]

Looks like the 2015 calculator is on the net already

http://164.177.142.72:8585/WizPersonalDetails.aspx

Have fun chaps :E

[junket]

That's the beta version!

[Al R]

I said;.. and the consequences of the scheme cost cap being breached remain a worry.

The government has just released details of the cost cap mechanism which seem to be set to be reviewed in 5 years or so. As expected, the fallbacks and potential impact is pretty much as expected.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/289366/public_service_pensions_actuarial_valuations_130314.pdf

"Costs may be rebalanced by amending scheme benefits for future accruals to alter the overall cost of the scheme, or by altering the level of employee contributions so that a higher or lower level of employer contributions is required. Scheme regulations will set out a process for agreeing the necessary action with stakeholders, and a default action to be taken if agreement cannot be reached within a reasonable time limit."

This might mean that the '15 scheme accrual rate (1/47) is amended in keeping with the Act to keep costs down. In English, this means that the way that your income is delivered isn't changed and the age that you get it isn't changed.. but the pace that your 'pot' grows does slow down.

I was thinking how Reservists are now part of the same scheme as Regulars. Could a convenient consequence of that be that in 'x' years, more and more people are transferred to the Reserves (à la USAF) so that furthers savings are made and for scheme membership to be maintained?

[Bannock]

The latest Brief I have seen includes this little nugget.

"Abolition of abatement if you return to the Services after retirement
Under pension / EDP regulation if an individual is in receipt of either a pension or EDP and they re-join, their monthly earnings are capped and therefore they can lose some of either their income stream or lump sum. This will be abolished in AFPS 15 so the will be no upper earning limit for AFPS 15 payments"

Could someone clarify that this means when I rejoined after retiring and they stopped my pension and clawed back my commutation , I am going to get my pension back.

If so, then jumping ship before April 15 doesnt look so attractive.

[Voxpop]

If an AFPS 15 member leaves with an AFPS 15 pension (so age 60 or ill health) and return to Armed Forces service, they get paid and keep their pension. I fancy that it will be unlikely that at age 60+ folks will return to service and, with a Tier 2 or 3 equivalent ill health condition, I would be surprised if individuals could meet minimum health requirements.

[Lima Juliet]

Voxpop

Quite. Although you can serve to 65 in FTRS posts...

http://www.wearysloth.com/Gallery/ActorsD/tve5017-19690911-82.gif

Don't panic!!!

LJ :ok:

[teeteringhead]

Although you can serve to 65 in FTRS posts... .... or longer if you are the right person for the job.

He who we have been discussing elsewhere (JM) is - I think - 65 already and has just started his FTRS contract........

[The B Word]

It seems to me that the Fire Brigades Union is doing a far better job of protecting the interests of its members than what is being dealt to the UK Armed Forces along with the usual sound bites coming from the MOD saying that it is a great new pension.

It seems wholly wrong to move the pension age to 60 to those still serving and then not having a way of being able to earn it as the terms of service boot you out at 55. Is NEM supposed to address this?

Are they really? They've all lost wages over several hours of industrial action and inbetween starting to ransom the Government and failing as the pension changes they are fighting against have become law in April. Also, is it really too much to ask for firefighters to be fitness tested to a similar standard as ours in the military? At least their pension changes meet with their exit points (unlike NEM as you point out).

When it comes to the new pension scheme (AFPS15) people should still qualify for the Early Departure Payment scheme having made the 20/40 point (20 years of service or age 40 whichever is later). It's just that they may not make the final age 60 point. There are plenty of Chief Techs that currently leave at age 47 (if I remember, this is their normal maximum) and get their pensions immediately on retirement, as do Corporals and Sergeants that leave at their 22 year point.

I'm guessing that the pension will be smaller at EDP, but AFPS15 was supposed to save money as we're all living longer. I guess the hardest hit will be flight lieutenants, warrant officers and flight sergeants who will have age 55 retirement dates (from what I've heard about NEM in the early briefings) will be the worst hit - they will get some pension on retirement and then the rest at 65/66/67.

I doubt, even if we could, that the military would enjoy much sympathy from the generl public if we went on strike - just like the firefighters.

The B Word

[Lima Juliet]

Deliverance

Here is an option. AFPS15 is the same for Regular and Reserve personnel. So at age 55 (or earlier) get a FTRS job and serve to age 60. That way you get the full whack of AFPS pension.

I know it's not ideal, but there is always a way forward with things to get to where you want to be.

LJ :ok:

[Lima Juliet]

TH

I always thought that 65 was the max age but I will bow to your superior knowledge! I have heard of those on FTRS97 and RAFR(MSF or CC) going past 65 though.

LJ :ok:

[Onceapilot]

All this, is just another facet of a military structure that has completely lost its way IMO. I would be amused if I wasn't a UK resident and taxpayer!:oh:


OAP

[teeteringhead]

Leon

JM is - IIRC - just turned 65, so was 64 when he got his 4 year 2FTS FTRS job at the back end of last year. Maybe 65 is the absolute max to start??

As for RAFR MSF/CC, they are technically Civil Servants, so depending on when they joined (the CS) they may have no upper age limit at all! I know of one such who I think is 72 this year ..... but on a good day would pass for much younger. :ok:

[4everAD]

The B Word:
When it comes to the new pension scheme (AFPS15) people should still qualify for the Early Departure Payment scheme having made the 20/40 point (20 years of service or age 40 whichever is later).

Careful, if has to be 20 years of service AND at least 40 years of age or you only get £10000 resettlement grant then nothing until state pension age! This little rule is going to screw over anyone serving only 22 years who joined under 18. I've screamed and shouted about this to anyone who'll listen but it seems the Armed Forces aren't bound by any age discrimination policy.

I've created an imaginary Cpl joining at 17 and serving 22 years on the new pension calculator and it confirms my above, I assume it'll be the same for Flt Lt's who are young when joining and don't serve past 20 years?

[5 Forward 6 Back]

4everAD,

Flt Lts caught in that trap were all offered an opportunity to extend their commission to age 40 to make sure they'd get AFPS15 EDPs. As AFPS15 service counts from age 18 (unlike AFPS75 which counts from 21 for officers), most serving to 38 would be pretty close to it anyway.

I know a few people who've extended between 2 and 5 years to get it.

[4everAD]

Fair enough so it's just JRs who joined aged <18 getting screwed then! Theres been no extensions given to them. I can't see how you can have 2 people join up on the the same day serve identical careers to 22 year point but because one is >18 on joining they get approx £250,000 more than the <18. Lawyers are going to rape the MOD over this one in years to come just like the gay/pregnant cases. Why are the powers that be blind/ignorant/uncaring to this?

[Melchett01]

Post moved by OP to 12 Year Engagement thread

[ALM In Waiting]

Is this IBN online yet?

[Melchett01]

Our clerks attached it as a hyperlink on Orders earlier today, not sure where they got it from. If it isn't yet on general release (now wondering who our clerks know?!) I can't see it being long before formally released as I think it's already overdue.

[ALM In Waiting]

I'll keep an eye out. Thanks for the heads up.

[junket]

Gents - the IBN is in draft. The HR chain have received an advance copy to help them prepare for subsequent briefings next week. What they have received is the 90% version - just be careful if the clerks have issued it out.

[Al R]

I have said for some time that AFPS 15 was/is unsustainable (http://www.pprune.org/military-aviation/505244-new-state-pension-system-3.html#post7795280) and that the cost cap would be breached far quicker than the promised 25 years, maybe as soon as before the end of the life of the next Parliament. This is the economic reality that no manner or amount of waffling, presentations or campaigning can eclipse. So, it was interesting and depressing to read, on pages 65-68 and hidden within the bowels of the Autumn Statement.

2.13 Public service pensions revaluations – New employer contribution rates will be introduced for the Armed Forces Pension Scheme, the Firefighters’ Pension Scheme, the Judicial Pension Scheme and devolved public service pension schemes in Scotland and Northern Ireland from April 2015.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382327/44695_Accessible.pdf

The table a couple of pages before that shows just how dramatically public sector pensions are going to be chipping in; annually, to the tune of up to £400 millions or so per annum for the next 5 years. That's new money; money, it is claimed, needed to finish the Hutton reforms that lead to the introduction of AFPS 15. If even I saw it coming, it had to be coming. And if the MoD knew it was coming, it shows scant 'corporate' regard for future personal planning.

If the cost cap is going to breached (and the MoD was already operating within tight confines on this due in part, to the very generous accrual rate of AFPS15) then the promised 25 year window of no pension change will be another target that fell when hit.

That will mean either further cuts in service or more changes to the pension. And because SP don't actively chip in, how can that happen? Cuts to AFPS wouldn't have been popular, certainly while Herrick was ongoing, so it might be most likely to assume the accrual rate (http://www.echelonwealthcare.co.uk/future-armed-forces-pension-scheme-f-afps-care/) for AFPS 15 (of 1/47) gets sharply revised, perhaps to something in the region of 1/65 or 1/70, or maybe even adding another year or two the scheme normal retirement age.

[Lima Juliet]

Crikey Al, happy christmas mate! Any idea when it will become unaffordable in your expert and valued opinion? I did think that 1/47th was a bit generous and that with the reverse commutation I worked out that it was closer to 1/56th with a similar lump sum to AFPS05. So there is certainly wriggle room to go towards 1/55th to 1/60th to get a similar deal - but another year or 2 on normal retirement date then I really will be Cpl Jones in most above made in May!!!

LJ

[Al R]

If anything might happen, the sooner the better.. a year or so after getting another 5 year mandate, that'd be a management call I'd imagine, but why wait? It'd be interesting to see what level of legislative change would be required to simply fine tune the accrual rate instead of starting it all again, as compelled by Hutton.

And Happy Christmas back. ;-)

[Al R]

If the cost is in variance to the cost cap by +/- 2%, the Secretary of State can 'consult' and then make changes.

2016 at the earliest?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/318012/210514_letter_from_gov_actuary_to_hmt_4.pdf

In response to a rather ominous..

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/318011/150514_letter_from_hmt_to_gov_actuary_4.pdf