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AFPS15 - government decision.

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AFPS15 - government decision.

Old 16th Jul 2020, 15:43
  #141 (permalink)  
 
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All service before 2022 is still on '75 terms if you want it to be so then. Service after 2022 is on '15 so you get a mix of the pension (75/15), just like now. It's not the end of the world but it alos isn't what many thought would happen either.
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Old 16th Jul 2020, 15:51
  #142 (permalink)  
 
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No, not the end of the world. Maybe those that recently accepted PAS thinking they were back on 05/ 15 May not see it like that though.
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Old 16th Jul 2020, 17:29
  #143 (permalink)  
 
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On 15 you have to do until age 60 to get the enhanced pension. A day before that,. and itís a much smaller EDP and wait til you reach pension age, 66-68. Itís a gamble to be on 15, as it is a cost saving measure.
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Old 16th Jul 2020, 18:15
  #144 (permalink)  
 
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Originally Posted by Countdown begins View Post
On 15 you have to do until age 60 to get the enhanced pension. A day before that,. and itís a much smaller EDP and wait til you reach pension age, 66-68. Itís a gamble to be on 15, as it is a cost saving measure.
Isnít 6-8 yearsí-worth of the difference between the 59.99yr EDP and the 60yr pension almost exactly equal to the lump sum you get if leaving on EDP terms? I know lots of people who have deliberately left shortly before their end of engagement precisely to access the money in this way. Itís a useful choice to have. When I took the decision to accept the age 60 end of service, I calculated that I could PVR/ET at any point after age 55 without taking any pension hit at all. The 75 portion is fully accrued by then so it canít be at the PVR rate.

15 is also better than 75 for some due to its continued accrual beyond 34yrs commissioned service and the advantage of averaging the higher salary in the second half of a career. A cost-saving measure over a whole career, for sure, but those with an even mix of 75 and 15 have done well I think.

Last edited by Easy Street; 16th Jul 2020 at 18:49.
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Old 16th Jul 2020, 19:11
  #145 (permalink)  
 
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Originally Posted by Countdown begins View Post
No, not the end of the world. Maybe those that recently accepted PAS thinking they were back on 05/ 15 May not see it like that though.
Can you please explain to those of slow thought/understanding why this is a lose for PAS...asking for a friend
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Old 16th Jul 2020, 19:16
  #146 (permalink)  
 
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You need to balance your own personal risks. Nobody will live forever, and aches and creeks can quite easily ground people. You canít leave.
Itís actuary territory for the stats and risks, but Iím pretty sure that being in between the pension sweet spots takes nerve and crossed fingers.
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Old 16th Jul 2020, 19:27
  #147 (permalink)  
 
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Thelizardking

Once you accept PAS you have 5 years of hard labour to serve. A couple on the Sqn took it recently, and took the £20k that went with it. They canít leave until they complete 5 years. Their RoS (??) takes them beyond 2022, but not that far. They canít leave now, and when they do leave they are on 15. The dates would identify them to the CM so Iím being deliberately vague. They will now go onto an EDP for a significant period of time.
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Old 16th Jul 2020, 20:58
  #148 (permalink)  
 
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Originally Posted by Countdown begins View Post
Once you accept PAS you have 5 years of hard labour to serve. A couple on the Sqn took it recently, and took the £20k that went with it. They canít leave until they complete 5 years. Their RoS (??) takes them beyond 2022, but not that far. They canít leave now, and when they do leave they are on 15. The dates would identify them to the CM so Iím being deliberately vague. They will now go onto an EDP for a significant period of time.
They will be on a (very small) 15 EDP for a significant period of time, but they will also be entitled to their other accrued benefits straight away. Those benefits don't disappear just because they retire on a different scheme.
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Old 16th Jul 2020, 21:45
  #149 (permalink)  
 
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Originally Posted by Easy Street View Post
They will be on a (very small) 15 EDP for a significant period of time, but they will also be entitled to their other accrued benefits straight away. Those benefits don't disappear just because they retire on a different scheme.
Iím not the oracle, just read into my area of interest.

can you expand on the benefits piece?
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Old 17th Jul 2020, 00:47
  #150 (permalink)  
 
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Originally Posted by Countdown begins View Post
Iím not the oracle, just read into my area of interest.

can you expand on the benefits piece?
Say they leave in 2024 having accumulated 20 years on AFPS75 and 2 years on AFPS15. They would receive a lump sum and immediate pension worth roughly 91% (20/22) of a Ďpureí 22-year AFPS75 pension, plus a 2-year AFPS15 EDP (which because of their high salary in those 2 years is potentially worth more than the Ďmissingí 9% of the 75 pension). The AFPS75 entitlement doesnít go away; for instance it is not all converted into a 22-year AFPS15 EDP just because they retired 2 years after the scheme changed. This is whatís known as ďaccrued rightsĒ and has been a sacrosanct principle of all the pension reforms over the last 15 years. The calculation is a good deal more complex than Iím making out here but I think it illustrates the principle. The actual formulas are available in the pension legislation (see links here) but you will need to read very carefully indeed. Or wait for the official calculators to be updated, or join the Pension Society!

Last edited by Easy Street; 17th Jul 2020 at 08:52.
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Old 19th Jul 2020, 10:31
  #151 (permalink)  
 
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- the MoD has stated that for the remedy period it will ensure all eligible Service Personnel will keep their accrued benefits.

This is the key statement above. As far as I see it, for those of us who transferred from 75 to 15 in 2015 (we kept accrued 75 benefits up to 2015 and 15 benefits post this date) this is essentially an extension of that process. We can now keep 75 benefits up till 2022 and 15 benefits after that date, for most, including PA, I think this will be a win but I am by no means an expert.
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Old 19th Jul 2020, 10:42
  #152 (permalink)  
 
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SOX80

Thatís what Iíd taken from it as well, which would be a great result if true.

The only question I then have is what happens at 55 if I leave before then?

In fact if I left next year would that give me all the benefits of a full pension at 55 that AFPS would have given me?

I will be joining the FPS to get answers but if anyone already knows itíd be great if you could share the info.

BV
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Old 19th Jul 2020, 11:29
  #153 (permalink)  
 
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BV,

My reading of it is that if you didnít switch to AFPS05 and you leave before 2022 then you have the option of going with full AFPS75 benefits. Note that you need to leave at either your 16/38 or 22/44 options or after age 55 to avoid premature retirement rates. The options (with any adjustments to reflect training returns of service) will be recorded on your file because they remained extant if you had any AFPS75 history, even before McCloud. If you are within a year of an option then there will be some arguing with CM to do... they might say you have left it too late to activate your option; you could try saying the pension announcement has changed the calculus and merits special consideration. I suspect there will have to be some sort of class settlement on that... luckily for the RAF I suspect the economic situation will probably stop there being a stampede for the exit! Taking an option can be rescinded later without impact so Iíd suggest talking to CM pronto if the one-year cutoff is likely to be a player for you.
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Old 19th Jul 2020, 11:39
  #154 (permalink)  
 
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ES

My 5 year PAS RoS expires next summer so itís not an option point but I do have options outside the military.

Leaving on AFPS75 terms which provides full pension at age 55 is quite a jump in income (I had 15.5 years of AFPS75 when the 15 switch happened but my switch to PAS happened in 16) compared with the 75/15 combo which delays the full benefits until age 67.

I definitely need to do some maths. Now, where is that pensions calculator?!

BV
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Old 19th Jul 2020, 12:53
  #155 (permalink)  
 
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Originally Posted by Easy Street View Post
Note that you need to leave at either your 16/38 or 22/44 options or after age 55 to avoid premature retirement rates.
In recent years there has been an explosion in punitive RoS for otherwise routine career moves and/or training. One of the unintended (but sometimes rather convenient) consequences is that an option point that has been overtaken by an RoS does become a (hidden) deferred option point once the RoS (or sequential RoS) period is completed. Manning will claim ignorance on the matter but when pressed hard they have to follow the regulations and precedents.

Of course, pre-2004 there was no such thing as PVR pension abatement once you had made your 38/16 point (really a 37/16 point if you worked the fine print). It only came in with a refinement of rules to aid JPA implementation. Rather a lame justification to change our terms of service & pension, but here we are.

Oh and don't forget the virtual 50/30 point either - no PVR abatement at that point, as well no additional PVR-waiting time or other manning control measures.
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Old 19th Jul 2020, 13:05
  #156 (permalink)  
 
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Glad they're doing something about it, even if it looks like it won't be quite the "choose your own" nirvana that might have been hoped for.

@Al R etc, regarding age discrimination, always wondered how AFPS 75 justified the non-accrual of pension below the age of 21, given otherwise entirely equal terms of service between non-grads joining up. Any thoughts?
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Old 19th Jul 2020, 13:15
  #157 (permalink)  
 
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JTO - thank you for the correction on 50/30 vs 55!

A question of my own now. Does anyone know what the position on lifetime allowance would be if one were to retire, crystallise a lucrative AFPS75 pension, and immediately rejoin on AFPS15? I understand fully that the 75 immediate pension will be abated to keep total annual income no higher than the previous salary, and that annual allowance breaches could still be a player (although unlikely if rejoining on a lower salary). Rather, my question is on the lifetime tax treatment of the resulting Ďvirtual pension potí when the two parts of it are being simultaneously topped up and drawn down. There are quite a few out there who have done this, I believe, so I hope there is one among the audience here! Given the dire financial straits the government finds itself in, I see the chances of an increase in pension tax relief being somewhere between Ďnilí and Ďzeroí, and this pension ruling may present an opportunity to take stock. Pension tax avoidance and reduction in mortgage interest (by ploughing the AFPS75 retirement lump sum straight in, minus the family holiday of a lifetime ) could make this quite compelling.

Last edited by Easy Street; 19th Jul 2020 at 13:26.
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Old 19th Jul 2020, 13:37
  #158 (permalink)  
 
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Originally Posted by pba_target View Post
@Al R etc, regarding age discrimination, always wondered how AFPS 75 justified the non-accrual of pension below the age of 21, given otherwise entirely equal terms of service between non-grads joining up. Any thoughts?
I think the answer to that is ďthemís the T&C, they were available for you to read when you signed up, tough luck.Ē Non-grads got 3 more yearsí pay, and pensions were equal if leaving at the IPP.
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Old 19th Jul 2020, 14:25
  #159 (permalink)  
 
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If only the other T&C's that were more in out favour had remained so equally rigid.
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Old 19th Jul 2020, 18:04
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Originally Posted by Easy Street View Post
I think the answer to that is ďthemís the T&C, they were available for you to read when you signed up, tough luck.Ē Non-grads got 3 more yearsí pay, and pensions were equal if leaving at the IPP.
I think the logic you quote wouldn't hold water. Sadly a bit of digging shows that age only became a protected characteristic in 2010, and you'd struggle to argue that your pension wasn't created before then I guess!
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