AFPS 75 and NEM
Thread Starter
AFPS 75 and NEM
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?
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?
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Pension swindle
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.
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.
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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.
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.
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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.
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
.... 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
Thread Starter
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.
Thread Starter
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.
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
Warning - Just rumour and hearsay from a mate in Air Cmd, though... (But a trusted source).
LJ
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.
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.
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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).
• 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).
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?
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?
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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
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.
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.
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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.
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’.
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?
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?
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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...on_savings.PDF
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...on_savings.PDF
Last edited by Al R; 21st Apr 2013 at 06:01.