New Pension Scheme
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Best stay on '75, stay on the career stream and hope to get promoted when everyone else leaves having had enough. Then '75 is quite a good deal!
... unless of course they make a shed load more people redundant when the new carriers are cancelled
... unless of course they make a shed load more people redundant when the new carriers are cancelled
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VitaminGee,
You need to watch out. I hear that the RN have all but stopped extending the service of aircrew Lt Cdrs over the age of 50. If that happens to someone who's in AFPS05, they would take quite a big hit to their pension.
It will be interesting to see in a few years time just how many aircrew Lt Cdrs in AFPS05 actually serve to age 55!
You need to watch out. I hear that the RN have all but stopped extending the service of aircrew Lt Cdrs over the age of 50. If that happens to someone who's in AFPS05, they would take quite a big hit to their pension.
It will be interesting to see in a few years time just how many aircrew Lt Cdrs in AFPS05 actually serve to age 55!
Last edited by LFFC; 11th Jul 2005 at 16:50.
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Some Calculations
In case anyone is interested in an estimate of the potential relative merits, or otherwise, of AFPS05 compared with AFPS75, I tried a series of calculations to compare one with the other for 2 canned examples, retiring at a range of ages between 40 and 55.
I apologise that these illustrations cover only two of many potential profiles, and are currently limited to Officer ranks, and exclude PAS aircrew (whose position, I think it is clear, is rather different to everybody else).
These examples are for 2 Officers, each of whom joined on his 18th birthday. One reaches the rank of Flt Lt/Lt/Capt and proceeds to the highest pay increment for the rank. The other is promoted to Sqn Ldr/Lt Cdr/Maj on his 37th birthday. Both serve initially to age 40, at which point the Sqn Ldr has just completed 3 years in the rank.
If they now both retire at age 40, then their total accumulated pension value paid to age 65, assuming 3% year-on-year inflation over the years to age 55, once all lump-sums are included (but ignoring the affects of taxation, which will vary between individuals) are:
Sqn Ldr: AFPS05 value = 78% of AFPS75 value. At age 64, prior to payment of 2nd AFPS05 lump sum, AFPS05 value was only 65%.
Flt Lt: Same comparison: 84% (was 71% at 64).
Neither can reach parity between the 2 schemes unless they live to at least 100.
For retirement at 45:
Sqn Ldr: 82% (77% at 64)
Flt Lt: 90% (75% at 64)
Parity point assessed as being in the very late 80s.
For retirement at 50:
Sqn Ldr: 86% (69% at 64)
Flt Lt: 81% (65% at 64)
Parity point about mid 80s
For retirement at 55
Sqn Ldr: 108% (difference equates to about £26000 in total value)
Flt Lt: 104% (about £10000)
This profile was chosen to allow the extra 3 years service, and the potential to exceed 35 years Reckonable Service in AFPS05, to have an effect. It demonstrates that for these particular individuals, the cross-over point does occur, but only very close to the age 55 point. No account has been taken of improved benefits elsewhere in AFPS05, the value of which individuals must assess for themselves.
These examples do not reflect any particular individual. They are provided to assist understanding of the intent of AFPS05, which is not only to pull people through to age 40, but to fundamentally redistribute the balance of pension income from those who leave in mid-career towards those who will serve a full career. They also demonstrate that any claim that the payment of the second EDP lump sum at 65 fully restores the balance at that point is bogus, although it does clearly reduce the deficit considerably (if you are prepared to wait for it).
Regards
Ginseng
PS: I should have made it clear that all values are estimated in 2005 £s, having been calculated from 2005 pay and pension scales. The AFPS75 pension rates used are the reduced rates for exit by PVR for all ages under 55, as is most appropriate for a fair comparison.
I apologise that these illustrations cover only two of many potential profiles, and are currently limited to Officer ranks, and exclude PAS aircrew (whose position, I think it is clear, is rather different to everybody else).
These examples are for 2 Officers, each of whom joined on his 18th birthday. One reaches the rank of Flt Lt/Lt/Capt and proceeds to the highest pay increment for the rank. The other is promoted to Sqn Ldr/Lt Cdr/Maj on his 37th birthday. Both serve initially to age 40, at which point the Sqn Ldr has just completed 3 years in the rank.
If they now both retire at age 40, then their total accumulated pension value paid to age 65, assuming 3% year-on-year inflation over the years to age 55, once all lump-sums are included (but ignoring the affects of taxation, which will vary between individuals) are:
Sqn Ldr: AFPS05 value = 78% of AFPS75 value. At age 64, prior to payment of 2nd AFPS05 lump sum, AFPS05 value was only 65%.
Flt Lt: Same comparison: 84% (was 71% at 64).
Neither can reach parity between the 2 schemes unless they live to at least 100.
For retirement at 45:
Sqn Ldr: 82% (77% at 64)
Flt Lt: 90% (75% at 64)
Parity point assessed as being in the very late 80s.
For retirement at 50:
Sqn Ldr: 86% (69% at 64)
Flt Lt: 81% (65% at 64)
Parity point about mid 80s
For retirement at 55
Sqn Ldr: 108% (difference equates to about £26000 in total value)
Flt Lt: 104% (about £10000)
This profile was chosen to allow the extra 3 years service, and the potential to exceed 35 years Reckonable Service in AFPS05, to have an effect. It demonstrates that for these particular individuals, the cross-over point does occur, but only very close to the age 55 point. No account has been taken of improved benefits elsewhere in AFPS05, the value of which individuals must assess for themselves.
These examples do not reflect any particular individual. They are provided to assist understanding of the intent of AFPS05, which is not only to pull people through to age 40, but to fundamentally redistribute the balance of pension income from those who leave in mid-career towards those who will serve a full career. They also demonstrate that any claim that the payment of the second EDP lump sum at 65 fully restores the balance at that point is bogus, although it does clearly reduce the deficit considerably (if you are prepared to wait for it).
Regards
Ginseng
PS: I should have made it clear that all values are estimated in 2005 £s, having been calculated from 2005 pay and pension scales. The AFPS75 pension rates used are the reduced rates for exit by PVR for all ages under 55, as is most appropriate for a fair comparison.
Last edited by Ginseng; 11th Jul 2005 at 21:50.
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Ginseng - ta for the reply.
Re "thinking of you all re my PAS pension": I had planned to leave the Service at my IPP - the PAS + AFPS05 put paid to that - despite being the holder of a new "frozen ATPL".
Cash was not the only reason however...service offered to Queen n Country still appeals for some reason...and you just cannot beat the mil cameraderie...
Gulf War 1; now February after 3 months or so deployed:
Nimrod Air Eng: I'm so homesick and fed up I think I'll go and hang myself.
Other crew member: Well don't swing too much - you'll make yourself sick.
Another crew member: ...and we'll have to clean it up...
Regards
Re "thinking of you all re my PAS pension": I had planned to leave the Service at my IPP - the PAS + AFPS05 put paid to that - despite being the holder of a new "frozen ATPL".
Cash was not the only reason however...service offered to Queen n Country still appeals for some reason...and you just cannot beat the mil cameraderie...
Gulf War 1; now February after 3 months or so deployed:
Nimrod Air Eng: I'm so homesick and fed up I think I'll go and hang myself.
Other crew member: Well don't swing too much - you'll make yourself sick.
Another crew member: ...and we'll have to clean it up...
Regards
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Covec
I agree. If I didn't still find enjoyment and satisfaction in it I wouldn't still be here. Oh, plus the fact that I'm probably unemployable anywhere else!
Regards
Ginseng
Regards
Ginseng
Blame My Parrot
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LFFC
Thanks for the concern. However, it is not a case of "extension" in my case. PAS in the RN manifests itself as the Full Term Commission (Aircrew) or FTC(A) with a normal retirement age of 55.
If they wanted to stop me going past 50 they have blown it - by just over a year already!!!
VG (determined to cling on for another 3 yrs and 361 days!!)
If they wanted to stop me going past 50 they have blown it - by just over a year already!!!
VG (determined to cling on for another 3 yrs and 361 days!!)
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I take it that you have not taken up the retention bonus, otherwise you will need to repay that if you leave before 22. The principal of signing on to the new pension scheme and claiming your EDP at 18 years is sound as far as I am aware.
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Calli, JTO
All very good questions. Sorry, but I am not going to try to answer them for you as I do not feel sufficiently well clued-up on NCA Terms of Service, and I would not like to say anything which might prove to be wrong (I know, that hasn't stopped me in the past!). The best suggestion I can make is to wait for your OTT pack, run the various scenarios through the on-line calculator (which should be available at www.mod.uk/issues/pensions from Mon 18 Jul) and then take your questions on TOS to your Chief Clerk in the first instance. Clearly, you need to get definitive answers in order to be able to make an informed choice.
Regards
Ginseng
Regards
Ginseng
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hey, thats a good calculator. Apparently, if I were to make Admiral I will leave with a golden handshake of £249,000 AND an annual pension of £149,000. Phew. Now, How do I get to be an Admiral????
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Calculator is on the MOD Website .
Just used it and found that if I leave after 22 years and live to 75 then I will be down £140K if I changed over to the new scheme.
Not a hard decision to make then!
Just used it and found that if I leave after 22 years and live to 75 then I will be down £140K if I changed over to the new scheme.
Not a hard decision to make then!
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Thanks for the link. I've just gone through various combinations of exit date, rank etc and assuming I live to be 80 I haven't found a single instance where I am better off under the new scheme.
As you say, not a particularly difficult decision to make.
As you say, not a particularly difficult decision to make.
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Well, the calculator arrived on the advertised date and, as far as I can tell, works correctly within the stated limitations. It is disappointing that, for the most part, it will only cope with whole years of reckonable service, particularly as the PAS/PES(A) portion has to use the number of days as PAS to calculate the AFPS75 PAS pension enhancement correctly. If this could be included, I don't understand why the rest could not be developed to calculate for uncompleted part years. What you need to do is force the calculations for the whole years above and below your retirement date, then apportion the difference (number of extra days/365) and add the extra figure to the total for the lower number of years. I also found that, when I included dates which involved a fraction of a year, the calculation was rounded down for AFPS75, but up for AFPS05, producing a comparison which appeared to be the opposite of the truth (although the reason for the difference was visible). Be aware also that it cannot calculate for less than 2 years in the current rank at retirement, and that for commissioning from the ranks it will assume that at least 5 years commissioned service have been given at retirement. For PAS/PES(A), it is not possible to obtain a correct AFPS75 calculation directly for a level above the bar for a specialisation, as these levels are not offered in the menu, but the AFPS05 calculation will be correct if you use the pilot's menu and specify the appropriate level. The AFPS75 calculation alongside will not be correct, because it will be based on the pilots' daily enhancement rate. With those limitations in mind, happy calculating!
Regards
Ginseng
Regards
Ginseng
Last edited by Ginseng; 18th Jul 2005 at 22:01.
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Well I played with the calculator and with option points at 41 and 44 I would consider that I would have to be stark raving mad to change to AFPS 05.
Granted that if I stay in 'til 55 AFPS 05 will equate to an extra £700pa at age 55 and another £2k on the gratuity, the financial loss with an early departure don't appear to be worth the extra few quid if I stay. Comments please.
Granted that if I stay in 'til 55 AFPS 05 will equate to an extra £700pa at age 55 and another £2k on the gratuity, the financial loss with an early departure don't appear to be worth the extra few quid if I stay. Comments please.
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Calli,
You must have 2 years service left to transfer onto the 2005 scheme. This might be a shocker to some!
I only found out at a OTT brief recently. Effectively, if you have less than 2 years to your ROD, you will not be able to go across. I would suggest that if you have PVR / resigned prior to transfer date you will not be eligible either.
You must have 2 years service left to transfer onto the 2005 scheme. This might be a shocker to some!
I only found out at a OTT brief recently. Effectively, if you have less than 2 years to your ROD, you will not be able to go across. I would suggest that if you have PVR / resigned prior to transfer date you will not be eligible either.
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Muff C
Sorry, but I really don't understand where that comment comes from, and I think you may be confused. You have to have a minimum 2 years of service (from your original date of joining) to establish an entitlement to most AFPS benefits (for example, an initial preserved pension value). That point is common to both the AFPS75 and AFPS05. I am completely unaware of any restriction on transfer to AFPS05 if you have served less than 2 years at the transfer date or have less than 2 years left to serve. As far as I understand it, the MoD gave the Parliamentary Select Committee on Defence an undertaking that all those personnel currently serving in AFPS75 at the transfer date would be eligible to elect to transfer to AFPS05 at that date if they so wished. If anyone knows different, I would be happy to hear from them.
Rej
You just noticed the gamble with AFPS05. Will you stay long enough to benefit a little, rather than potentially lose a lot? And of course, it all depends on the greatest unknown - how long you will survive in retirement.
Regards
Ginseng
Rej
You just noticed the gamble with AFPS05. Will you stay long enough to benefit a little, rather than potentially lose a lot? And of course, it all depends on the greatest unknown - how long you will survive in retirement.
Regards
Ginseng
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Can anyone help with the following scenario:
I transfer to new scheme and for some reason leave before age 55 thus entering into EDPs, lets say age 50.
Then I snuff it for natural reasons (eg heart attack) before the age of 65 and getting the proper pension and associated grant.
What would my wife get? Would she still get the pension lump sum (that I was going to pick up at 65)? Would she get a pension based on my years service immediately, or would she have to wait until I would have been 65 to pick up any benefits? Would she have to pay back anything (or have any money abated)?
I have tried to read the documents but get completely lost.
I transfer to new scheme and for some reason leave before age 55 thus entering into EDPs, lets say age 50.
Then I snuff it for natural reasons (eg heart attack) before the age of 65 and getting the proper pension and associated grant.
What would my wife get? Would she still get the pension lump sum (that I was going to pick up at 65)? Would she get a pension based on my years service immediately, or would she have to wait until I would have been 65 to pick up any benefits? Would she have to pay back anything (or have any money abated)?
I have tried to read the documents but get completely lost.
Muff C,
I think the bit you may have seen is that you must be serving on 6 Apr 06 to be eligible to transfer to the new scheme. There are also some clauses regarding those on rendundancy terms.
I think the bit you may have seen is that you must be serving on 6 Apr 06 to be eligible to transfer to the new scheme. There are also some clauses regarding those on rendundancy terms.
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C130 bloke,
Try one of these two links
http://83.138.137.164/pensioncalcula...isclaimer.aspx
or
http://www.mod.uk/issues/pensions/pe...calculator.htm
The first one should take you straight to the disclaimer screen. I have used the calculator without any problems.
Try one of these two links
http://83.138.137.164/pensioncalcula...isclaimer.aspx
or
http://www.mod.uk/issues/pensions/pe...calculator.htm
The first one should take you straight to the disclaimer screen. I have used the calculator without any problems.