Early Departure Payments (EDP) vs Immediate Pension (IP)
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Early Departure Payments (EDP) vs Immediate Pension (IP)
This matter is confusing me and I would appreciate it if any of you would be able to clarify this issue for me...
I had heard nothing about the changes to the pensions scheme until reading about it in the 'Would you encourage your child to join' thread.
As a GD(P) bursar in the UAS system some of the major perks of the career I am letting myself into were the job security and the good pension set-up...
...or at least, that was until this week!
Now, assuming that I will be able to actually get myself into an operational job in a cockpit, the pension system seems set to change aswell.
Can anyone explain to me a couple of the following points...
1) As someone who has signed up to a permanent commission, but not entering the service until there is actually a space on an IOT course after my uni graduation in Summer 2005 (ie. after the pension change date of 1st April 2005), will I (or have I already) got in on time to catch the old pension scheme?
and...
2) Is this new scheme outright sub-standard to the old pension scheme in all cases or are the bad rumours I'm hearing limited to particular cases?
Thanks to anyone who can clear up either of these points to me...
...The career I have been working hard for, and looking forward to, since my earliest memories is suddenly starting to look far less appealing. All I can say is the job damn well better be exciting!
CS
I had heard nothing about the changes to the pensions scheme until reading about it in the 'Would you encourage your child to join' thread.
As a GD(P) bursar in the UAS system some of the major perks of the career I am letting myself into were the job security and the good pension set-up...
...or at least, that was until this week!
Now, assuming that I will be able to actually get myself into an operational job in a cockpit, the pension system seems set to change aswell.
Can anyone explain to me a couple of the following points...
1) As someone who has signed up to a permanent commission, but not entering the service until there is actually a space on an IOT course after my uni graduation in Summer 2005 (ie. after the pension change date of 1st April 2005), will I (or have I already) got in on time to catch the old pension scheme?
and...
2) Is this new scheme outright sub-standard to the old pension scheme in all cases or are the bad rumours I'm hearing limited to particular cases?
Thanks to anyone who can clear up either of these points to me...
...The career I have been working hard for, and looking forward to, since my earliest memories is suddenly starting to look far less appealing. All I can say is the job damn well better be exciting!
CS
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Trying to be neutral here!
The pension was changed ostentiably for tax reasons, as an "immediate pension" was no longer allowed under new tax laws, but also because litigation forced the MoD to introduce death benefits for unmarried partners. This change was supposed to be "cost neutral" ie no more or no less than the existing scheme, but MoD changed their interpretation of "cost neutral" to mean no more expensive, thus allowing savings. People living longer was also used as an excuse, despite the fact we have the smallest Air Force since Trenchard set it up all those years ago!
The new pension scheme has some advantages. Officers and rankers complete the same terms of service ie. 18 years. Provision will be made for unmarried partners. Er...that is about it!
The disadvantages. The "early departure payment" is approximately 50% of the value of the "immediate pension". You do not get the full pension through index linking until age 65, as opposed to 55 now. To get a decent income you will have to do a full career of 35 years, not an option open to everyone. Also, if you leave early, your preserved pension will be collected 5 years later at 65, not 60.
Most sensible people would not touch the new pension with a barge pole. Unfortunately, if you are a new entrant, you will have no choice. However, the RAF life has its own attractions (at the moment...stop, it cynic!) and there are opportunities to gain experience and qualifications transferrable back to civvy street.
How did this happen? Because we have no representation and cannot comment in public on our conditions of service - we were taken advantage of! Will things get worse? Possibly, but European legislation has its benefits as well as drawbacks and I can see some sort of federation establishing itself within the next decade, probably as a result of litigation by fed up people under the Human Rights Act against the MoD.
The pension was changed ostentiably for tax reasons, as an "immediate pension" was no longer allowed under new tax laws, but also because litigation forced the MoD to introduce death benefits for unmarried partners. This change was supposed to be "cost neutral" ie no more or no less than the existing scheme, but MoD changed their interpretation of "cost neutral" to mean no more expensive, thus allowing savings. People living longer was also used as an excuse, despite the fact we have the smallest Air Force since Trenchard set it up all those years ago!
The new pension scheme has some advantages. Officers and rankers complete the same terms of service ie. 18 years. Provision will be made for unmarried partners. Er...that is about it!
The disadvantages. The "early departure payment" is approximately 50% of the value of the "immediate pension". You do not get the full pension through index linking until age 65, as opposed to 55 now. To get a decent income you will have to do a full career of 35 years, not an option open to everyone. Also, if you leave early, your preserved pension will be collected 5 years later at 65, not 60.
Most sensible people would not touch the new pension with a barge pole. Unfortunately, if you are a new entrant, you will have no choice. However, the RAF life has its own attractions (at the moment...stop, it cynic!) and there are opportunities to gain experience and qualifications transferrable back to civvy street.
How did this happen? Because we have no representation and cannot comment in public on our conditions of service - we were taken advantage of! Will things get worse? Possibly, but European legislation has its benefits as well as drawbacks and I can see some sort of federation establishing itself within the next decade, probably as a result of litigation by fed up people under the Human Rights Act against the MoD.
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Just to add one further comment to what is a good reply from Jess, if on the new pension scheme, your pension will be final salary based, as opposed to rank dependant, so that for example, someone on the PA spine may well end up with a substantially larger pension under the new system, compared to the current system, but only if you stay to age 55
To elaborate a little on what Jess said, part of the thinking is that you can retire at your 18 year point, with your EDP, and still have enough working years left to start another career and earn a full pension from that career as well.
The MOD website explains in more detail about the new pension scheme, and it has also been discussed in earlier threads.
Bottom line is ..... if you join after 01 Apr 2005, you will be on the new pension scheme. Suggest you try and join before then, at least you would then have the option of old or new.
To elaborate a little on what Jess said, part of the thinking is that you can retire at your 18 year point, with your EDP, and still have enough working years left to start another career and earn a full pension from that career as well.
The MOD website explains in more detail about the new pension scheme, and it has also been discussed in earlier threads.
Bottom line is ..... if you join after 01 Apr 2005, you will be on the new pension scheme. Suggest you try and join before then, at least you would then have the option of old or new.
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Has somebody moved the Goalposts?
I always understood that the rules that were prevelant when you joined stayed with you throughout your Service. If you joined with certain Pension Entitlements then those Entitlements stayed with you throughout your Service.
Perhaps there may be some European Legistlation which could upset the Applecart???
I always understood that the rules that were prevelant when you joined stayed with you throughout your Service. If you joined with certain Pension Entitlements then those Entitlements stayed with you throughout your Service.
Perhaps there may be some European Legistlation which could upset the Applecart???
Possibly - but like most other cases which eventually required MoDinosaurs to mend their ways, it'd probably require a test case first....
Knowing that I could escape quicker than legislation could be enacted, the uncertainty over the pension issue first attracted my attention in late 2002 - and the lack of any positive statements from PMA or anyone else helped me to pull the handle after the AFPRB report of 2003.
I'd had my fun over the previous (all but 2) years, didn't trust the ability of Them at 't Top to stand up to the Treasury - "There's the 3rd star and the K (knighthood) to think of, old chap, so please don't rock the boat" - so banging out was the obvious way ahead. Shame really; for the previous 35 years I thought that I was doing something worthwhile. Evidently not.....
Knowing that I could escape quicker than legislation could be enacted, the uncertainty over the pension issue first attracted my attention in late 2002 - and the lack of any positive statements from PMA or anyone else helped me to pull the handle after the AFPRB report of 2003.
I'd had my fun over the previous (all but 2) years, didn't trust the ability of Them at 't Top to stand up to the Treasury - "There's the 3rd star and the K (knighthood) to think of, old chap, so please don't rock the boat" - so banging out was the obvious way ahead. Shame really; for the previous 35 years I thought that I was doing something worthwhile. Evidently not.....
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Cheers for the replies...cleared up a lot.
to quote kilo52
Indeed the case (at least to my understanding)...only thing is that not being in the RAF proper (in the RAFVR as a UAS Student with commitment to join the service after graduation in summer '05) I would not be surprised if the MoD in all its glory would deem us uneligible for the previous scheme, even though it was the previous scheme that was in place when I signed up for the bursary. Maybe not the case but lets just say I am fully prepared that this may be so.
Also, under the EDP scheme, does this now mean that people will be joining under permanent commissions of 16 years, but having to work 18 years to gain the pension? Surely that would mean that the MoD can get out of paying out pensions by refusing to extend service after 16 years?
CS
to quote kilo52
I always understood that the rules that were prevelant when you joined stayed with you throughout your Service. If you joined with certain Pension Entitlements then those Entitlements stayed with you throughout your Service.
Also, under the EDP scheme, does this now mean that people will be joining under permanent commissions of 16 years, but having to work 18 years to gain the pension? Surely that would mean that the MoD can get out of paying out pensions by refusing to extend service after 16 years?
CS
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Kilo,
Yes, those that joined the old pension scheme will be able to remain on that scheme, and take your pension whenever they leave the RAF. You will also have a 2 year window, from 1 Apr 05, to decide if you wish to join the new pension scheme.
Anyone joining the RAF after 1 Apr 05 will automatically be on the new pension scheme.
C_S
Not really sure about how Officer commissioning terms of Service will work, but I guess that a PC will be 18 years rather than 16, in the same way that a career to 18 years for non-commissioned will entitle them to an EDP (instead of the current 22 years).
Yes, those that joined the old pension scheme will be able to remain on that scheme, and take your pension whenever they leave the RAF. You will also have a 2 year window, from 1 Apr 05, to decide if you wish to join the new pension scheme.
Anyone joining the RAF after 1 Apr 05 will automatically be on the new pension scheme.
C_S
Not really sure about how Officer commissioning terms of Service will work, but I guess that a PC will be 18 years rather than 16, in the same way that a career to 18 years for non-commissioned will entitle them to an EDP (instead of the current 22 years).
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Has anyone out there seen a definitive ruling on paper as to how Gordon's pension ruling on not being able to take a pension until age 55 (which comes into effect in 2010) will affect those on the current pension scheme. As pointed out earlier in this thread on the current scheme we get an initial pension if leaving before 55 rather than an early departure payment under the new scheme. Is the IP exempt from the 2010 ruling? Or will anyone on the old pension scheme leving after 2010 not get anything at all until 55?
Yeller_Gait
I was having a look at pension details on the MOD website and my station intranet site just this last week. Yes, the change from the current scheme to the new scheme will occur between 2005 and 2007. However, I distinctly remember seeing that it will not be a 2 year window for decisions to move from one scheme to another. Rather, it will be a 7 month window within those 2 years - the 7 month window has not yet been fixed!
I was having a look at pension details on the MOD website and my station intranet site just this last week. Yes, the change from the current scheme to the new scheme will occur between 2005 and 2007. However, I distinctly remember seeing that it will not be a 2 year window for decisions to move from one scheme to another. Rather, it will be a 7 month window within those 2 years - the 7 month window has not yet been fixed!
Gentleman Aviator
As a GD(P) bursar in the UAS system some of the major perks of the career I am letting myself into were the job security and the good pension set-up...
As an old scots contemporary of mine once put it:
"If ye canna eat it, drink it, fly it or f*** it, it's nae worth talking to or about!"
If you are concerned about "perks", "job security" and "the good pension set-up" then I strongly suspect you may be heading for the wrong job.
[Surprised I beat you to that one BEags !]
Well, I agree! Back in the days of blue landrovers, all we were interested in was flying, beer, women and fast cars. Not pensions - that was something which was only of interest to dribbling old gits smelling of wee and whisky! We trusted 'Them' to ensure that we would be on a decent scheme.... Unfortunately, it seems that digi-yoof has to be a bit more worldly wise and savvy about his future prospects.
And that quote has to have come from that large Glaswegian thug who used to drive HM's SH Wessexes? The sort of bloke who you want on your side, not the opposition's! Met him some years back at RAF Mount unPleasant.
When I first made that line up, it was at school in about 1966 about some mate: "If you can't drink it, drive it, smoke it or poke it, he's not interested!" was the original line.
This later became "If you can't drink it, drive it, fly it or f*ck it, it ain't worth it" at Cranwell in 1968. Amazing how things end up!
And that quote has to have come from that large Glaswegian thug who used to drive HM's SH Wessexes? The sort of bloke who you want on your side, not the opposition's! Met him some years back at RAF Mount unPleasant.
When I first made that line up, it was at school in about 1966 about some mate: "If you can't drink it, drive it, smoke it or poke it, he's not interested!" was the original line.
This later became "If you can't drink it, drive it, fly it or f*ck it, it ain't worth it" at Cranwell in 1968. Amazing how things end up!
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Yeller_Gait, Mr B:
The reason for the misunderstanding is this:
It is intended to offer all members of the current scheme the chance to transfer by a future date not later than Apr 07 (hence the "2-year" window). However, in order to help you decide, the system has to produce for you an individual projection of your likely pension entitlement from each scheme. This will clearly take some time once the new scheme has been formally introduced in Apr 05. The target is to provide you with that information by a date not later than 7 months before the date by which you have to give your "Yes or No" decision; hence the "7 month" window. At least, that is my understanding. Hope this clears up the confusion.
Regards
The reason for the misunderstanding is this:
It is intended to offer all members of the current scheme the chance to transfer by a future date not later than Apr 07 (hence the "2-year" window). However, in order to help you decide, the system has to produce for you an individual projection of your likely pension entitlement from each scheme. This will clearly take some time once the new scheme has been formally introduced in Apr 05. The target is to provide you with that information by a date not later than 7 months before the date by which you have to give your "Yes or No" decision; hence the "7 month" window. At least, that is my understanding. Hope this clears up the confusion.
Regards
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Beer, Women and Flying
teeteringhead, BEags,
I agree that a love of flying (and possibly booze and birds) should be the main reason for wanting to become one of HM's finest, but you can't blame the boy for worrying about his future finances. How many people would really have joined up in the first place, or stayed in past their second tour/first secondary duty for minimum wage and no pension? We'd have an Air Force consisting almost entirely of super-keen teenagers - possibly no bad thing - and I imagine the ground branches, without even any decent toys to play with, would have serious recruiting problems.
I didn't care much about the money when I was 18 either, but people get old...
BCH
I agree that a love of flying (and possibly booze and birds) should be the main reason for wanting to become one of HM's finest, but you can't blame the boy for worrying about his future finances. How many people would really have joined up in the first place, or stayed in past their second tour/first secondary duty for minimum wage and no pension? We'd have an Air Force consisting almost entirely of super-keen teenagers - possibly no bad thing - and I imagine the ground branches, without even any decent toys to play with, would have serious recruiting problems.
I didn't care much about the money when I was 18 either, but people get old...
BCH
