Pension Commutation

[kintyred]

I took early termination at 51 on AFPS 05. I received EDP until 55 when my pension started. I rejoined a couple of years ago on AFPS 15. My 05 pension is currently stopped and will resume when I leave the Service this time. Does anyone know whether I could commute my 05 pension, even though I have already drawn it for 2 years?

[ForcesPensionSociety]

Do not confuse the EDP with a pension. They are separate.

From what you have said, you took your AFPS 05 pension early (at age 55) and received that and your EDP income.

When you rejoined, your AFPS 05 pension would have been abated and your EDP income would have stopped.

As the AFPS 05 pension is in payment, albeit abated, you have not options. Options have to be made when the pension is 'crystallised' (so, when it starts to be paid).

[ForcesPensionSociety]

Just to be very clear on this. AFPS 05 does not offer a commutation option. It offers an inverse commutation option which means that you can give up part or all of your AFPS 05 pension commencement lump sum to improve your taxable pension. AS the pension is in payment, the lump sum will have been taken, so no option remains.

[kintyred]

Thanks FPS

That's useful info for anyone about to consider reverting to 05 after the ruling on Fire Service pensions. On the face of it it looks like a good pension but if you have to pay 40% tax on it, (I have significant rental income) it is suddenly much less attractive.

[Background Noise]

Do not confuse the EDP with a pension. They are separate.

From what you have said, you took your AFPS 05 pension early (at age 55) and received that and your EDP income.

When you rejoined, your AFPS 05 pension would have been abated and your EDP income would have stopped.

I am suddenly hugely confused by this post - specifically 'taking your AFPS 05 pension early'. I left just before 55 and I get my EDP annual income of 75% of preserved pension and expect my PP to start at 65. What is this other bit of AFPS pension that you mention?

(FPS member)

[ForcesPensionSociety]

AFPS 05 allows you to leave with the EDP in payment AND then claim your preserved pension at any age from 55 but at a reduced rate. The EDP is not a pension and it carries on until age 65 irrespective of what you do with the preserved pension - you could claim it or transfer it out to your new employer and it would make no difference to the EDP. Claiming the pension early is an expensive lark - anyone thinking of doing it should check out the cost before committing themselves.

[ForcesPensionSociety]

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/911026/FINAL_DRAFT_-_AFPS_05_Your_Scheme_Explained.pdf

[Background Noise]

Ah, thanks - I thought I had AFPS05 squared away but had missed that very tiny reference. Where would you find out the actuarial benefit (or lack of) of taking the pension early? Not that I plan do it - I assume, cynically, that it would be less lucrative.

As for:

Do not confuse the EDP with a pension. They are separate.

From what you have said, you took your AFPS 05 pension early (at age 55) and received that and your EDP income.

I understand that bit, and I suspect that the OP used the term 'pension' in place of EDP annual income. It seems to me that most people refer to the lump sum (and/or any annual payment prior to age 55) as EDP and the subsequent annual income (from 55 to 65) as pension. It doesn't help that Equiniti refer to it as pension on P60s - as does HMRC.