AFPS 05 Reversion to 75 ?

[Chest Poker]

Hi

I am in the twilight of my service and selected (I think) to transfer to AFPS 05.

As the decision was made without a crystal ball, is there any opportunity to revert the decision and return to the pension I joined up on?

[Courtney Mil]

I'm sure I recall fom when we were offered the opportunity to transfer to AFPS05, that it would be a one way street.

[November4]

That's the way I remember it - you had to either stay with the 75 scheme or change over to 05. It was a once only decision.

[KPax]

Why would you want to unless you are leaving before you reach 55, I left on a pension just under £26k pa and a gratuity 3 times that, a lot more than if I had stayed on 75.

[Voxpop]

Just to confirm that it was a one-off decision and the only way you could now revisit it is if you can demonstrate that the information provided to you was significantly wrong.

See your Personal Messages

[Red Line Entry]

CP,

I'm on 75 and want to change to 05 - wanna swap?

[Fatjoff]

How so? I've just run the calculations on the MOD pensions calculator which confirmed that i would get a negligibly lower pension which would mean about a thousand pounds less gratuity had I transferred to 05. Which is why I stayed on 75. Am I missing something?

[Red Line Entry]

It's all very dependent on your personal circumstances. For me, at the time of the offer to change, there was a fair to middling chance that I would leave. Now, I'm pretty much certain I'll end up doing the full term. For me, not only does that mean more dosh under 05, but wifey gets more pension if I pop my cloggs before her.

[Party Animal]

Fatjoff,

I'm in the same boat. I don't understand why but the Pension Calculator has consistantly shown that I will get more on '75' than on '05'. Therefore, no brainer in my case to stick with the old and if I see any change as I actually approach retirement, I will fight the argument as suggested earlier.

[Alpha Whiskey]

I shifted to the 05 scheme thinking I would stay until the end, but ended up PVR'ing last year. I did wonder whether, in hindsight, I had made a huge pension mistake, but as it happens I have ended up with the most tax efficient circumstance given the salary I now get in civvy street.

In sum, I would be prepared to take the lower immediate pension if you expect the combination of it and your civvy salary to start breaching the 100k barrier. At that point, for every £2 earned over £100k, you lose £1 in your personal tax allowance.

Undoubtedly there will be Admin Ninjas out there who will tell me I've got that all wrong over time, but believing it right now makes me feel better!

AW

[Easy Street]

I'm sure Al R will be along soon, but in the meantime, can I just suggest that if you are intending to serve out your full term:


Transferring to AFPS05 back at the decision point was the correct decision based on the information available at the time.
The imminent end of both AFPS75 and AFPS05 on 1 Apr 15 means that the benefits accrued under each scheme will be effectively frozen. The majority of AFPS05 advantages accrue in the later stages of a career, so the enforced change to AFPS15 may well deny those advantages.
The high initial accrual under AFPS75, 'frozen' on 1 Apr 15, will be further boosted by further promotions after that date. As I understand it, promotions after 1 Apr 15 will have no effect on a 'frozen' AFPS05 pension.

I elected to stay on AFPS75 as I was unsure of my long-term intent. I'm now sure to be serving out - and happy that I stayed on AFPS75 in the light of the forthcoming changes. Definitely no chance of me swapping for anyone's AFPS05!

[rchdleigh]

I changed to AFPSO5 on the firm basis that I would serve to 55, which I did. As a result my pension was higher than it would have been under AFPS75. My gratuity was also higher under AFPS05.
Had I elected to retire before reaching 55 then I'd have been better off staying on AFPS75.
I suppose in retrospect I was one of the fortunate ones that gained from transferring to AFPS05.

[reds & greens]

^^^
I have 3 days left, then I'm out aged 55, after 36+years and on 05.
Would you swap with me...?
:E

[Al R]

Splinter time! Everyone's needs are different and everyone will have been affected differently (sorry!).

As an aside, I was reading the Equalities Impact Analysis for AFPS-15, which suggested that ill health, death and survivors benefits would be in line with AFPS-05, "but based on a career average earnings rather than final salary pension".

Assuming that the change referred to isn't based on equality and diversity, in the same breath, the report then claims that there is no difference between 05 and 15. But it seems that there is a change and if so, this might impact quite substantially on death in service benefits - particularly as the scheme member gains promotion and seniority.

Could voxpop comment?

[Professor Plum]

Easy street,

•The high initial accrual under AFPS75, 'frozen' on 1 Apr 15, will be further boosted by further promotions after that date. As I understand it, promotions after 1 Apr 15 will have no effect on a 'frozen' AFPS05 pension.

Promotions after 1 Apr 15 will have an effect on the AFPS05 pension.

The AFPS 05 pension accrued up to 1 Apr 15 will be based on rank on retirement, not on your rank at 1 Apr 15, so further promotions after 1 Apr 15 will benefit the AFPS05 pension accrued. I seem to remember that it was written in a DIN that was released explaining how the accrual would work.

Personally, I joined post 2005, so have always been on the AFPS05 scheme. As an aside, seeing as I hit top level increment in my current rank shortly after 2015, and that AFPS15 is a CARE scheme, theres little pension benefit in me working hard and bothering to get promoted!!

[Al R]

Anyone who achieved a high rate of accrual in the early part their ‘75 scheme, then experienced a tapering off effect will move onto the 1/47 accrual at a goodly mid-career rate of pay. And they too, should benefit if they are happy to mark time. But it is a shame that the debate always seems to evolve into winners and losers who might share the same cockpit.

NEM will allow for movers and shakers; and rightly so – you have time and facts to make an informed decision over which you have long term control. But making a ‘shall I, shan’t I?’ 75/05 decision whilst getting ready to live in a sandpit probably didn’t allow as much time for reflection; nor an element of self determination (as we have seen).

[Whenurhappy]

For the last 15 years I have been well away from the Main Stream light blue and was unaware (except, as it happens, through PPrune) about the AFPS 05/75 relative merits. Consequently I did not go to any of the briefings nor did I receive any of the information packs; at the last moment I stayed with AFPS75 on the basis that a new scheme is less likely to be more generous. As I hope to serve beyond 55 - again away from the main stream - I seem to have made the right decision, subject to the impact of AFPS 15 and NEM (see the other thread that I started out of frustration and confusion)

[Red Line Entry]

Although I think I will ultimately have made the wrong decision in staying on 75, one consolation is that it's the deal I joined on and at the time was happy to do so, so I haven't 'lost' on that initial position.

Maybe I should have changed, but I should also have picked 6 different lotto numbers last Saturday!

[Once A Brat]

....reading the uncertainity above, I'm glad I'm now a civvy drawing my (AFPS 75) pension!! As well as a nice civilian salary - the taxman's dream!

However, as I understood the briefings I attended before I bailed out. In the same way that you benefit, since it is based on rank on retirement, from promotions under AFPS75 despite the pension being frozen with the introduction of AFPS15, you similarly benefit under AFPS05 since it based on best 2 of 3 years salary in your final 3 years of Service. Hope this helps.

But as to the original question, I also seem to recall that there was a clause that if you were originally on AFPS75, transferred to AFPS05 and then were subsequently selected for redundancy that you had the option to transfer back. Not sure if it was an enduring arrangement or just for the redundancy rounds circa 2005/6

[soprano54]

No brainer as far as I was concerned! Converted to AFPS05 got back the years I lost when I was commissioned but not only that took the pensionable date back to the day I joined boy service (I'm Army) at 16! Larger gratuity, wife would have been better looked after if I'd popped my clog's while serving and a second lump sum at 65. Okay a slight drop in the yearly pension but hey I was able to retire at 53 and live quite comfortably.

[Chest Poker]

Are either 75 or 05 taxed before you get the money (monthly) or is what your yearly figure is simply divided by 12 ??

[Once A Brat]

Under both 75 and 05 then your pension is considered taxable income. The amount of tax and allowance applied depend on what else you are receiving in taxable income.....the pension is taxed at source as if PAYE so what you get is what you get.

If you need more than that you need to speak to Al R or another IFA as I'm just an amateur.

[lj101]

Chest

It's taxed monthly as an average (like our wages are) but no national insurance is taken off - the amount you are taxed depends on your tax code. SPVA will send a summary of your pension and what your monthly amount will be based on the tax code they are given by the tax office.
If you want you can get all of your personal allowances set against your pension at the beginning of the tax year and then (depending on your salary if you have another form of income) the tax office will apply a tax code against any other income/incomes.

I think that's correct.

[soprano54]

You're taxed monthly and your Personel Allowance should be £9445, rising to £10000 in April 14!:D

[Willard Whyte]

What's a fiver between friends? £9440 is the FY '13 - '14 tax allowance.

Although, I've always found it curious that (normal) tax allowances have conditionally ended in a '5'.