AFPS (Lifetime Allowance).
Its rather worse than that. Under the 75 scheme you had to complete 22 years to recieve a pension but everyones pay was abated to to take account of the "non-contributory" pension. the end result being that those commited for less than 22 years had their pay abated to pay for a pension they would never recieve. Not sure if this changed under later schemes.
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I am solely on AFPS05 (PA Spine pilot) but left the RAF in early 2014 on PVR terms at the age of 52. I am currently in receipt of an EDP and received my `3x lump sum` with no problems.
I will be 65 years old in early 2027 and am aware that I will need to `claim` for my RAF pension; but no earlier than 3 months before my 65th birthday.
Do I need to use the AFPS Form 8 or the AFPS Form 1?
They seem quite similar to me.
Grateful for any advice out there.
I will be 65 years old in early 2027 and am aware that I will need to `claim` for my RAF pension; but no earlier than 3 months before my 65th birthday.
Do I need to use the AFPS Form 8 or the AFPS Form 1?
They seem quite similar to me.
Grateful for any advice out there.
Last edited by Stanley Eevil; 9th Jan 2023 at 12:20.
Glad you asked that question Stanley, I am very similar to you - I left in late 2014 on PVR at 53 and will be 65 in 2026 (I'm sure you meant 2027 not 2017).
However, I wasn't aware of the need to claim or apply for my full pension and second lump sum so I look forward to someone answering your question.
However, I wasn't aware of the need to claim or apply for my full pension and second lump sum so I look forward to someone answering your question.
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Originally Posted by [email protected]
Glad you asked that question Stanley, I am very similar to you - I left in late 2014 on PVR at 53 and will be 65 in 2026 (I'm sure you meant 2027 not 2017).
However, I wasn't aware of the need to claim or apply for my full pension and second lump sum so I look forward to someone answering your question.
However, I wasn't aware of the need to claim or apply for my full pension and second lump sum so I look forward to someone answering your question.
They say that because our existing EDP (following AFPS05 `PVR`) is not classed as a `pension`, then the full pension benefits/2nd lump sum that we expect to obtain at age 65 under AFPS05 are classified as a `Preserved Pension`.
I was told that I WOULD therefore have to formally claim for those benefits by sending a completed `AFPS Pen Form 8`. This form is easy to download via the internet.
(For currently serving personnel shortly approaching their retirement date, the `AFPS Pen Form 1` should be used, so it`s important to use the correct form or your application could get `spat out` by the system).
Hope this helps!!
Nice one - thanks Stanley
Did they say you could apply now or do you need to wait until much closer to your 65th?
Did they say you could apply now or do you need to wait until much closer to your 65th?
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Originally Posted by [email protected]
Nice one - thanks Stanley
Did they say you could apply now or do you need to wait until much closer to your 65th?
Did they say you could apply now or do you need to wait until much closer to your 65th?
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LJ - you seem to know what you are talking about. 
I am wondering about the effects of commutation. Rough figures from my AFPS75 pension as follows:
Standard option - annual pension £24000 plus lump sum £72000
Commutation option - reduced pension of £19000 until age 55 to generate additional lump sum of £28000.
If I'm calculating it right, the first option uses £552000 of my lifetime allowance [(24000 x 20) + 72000] whereas by commuting I only use up £480000 [(19000 x 20) + 72000 + 28000].
Is that also your understanding?
If so, it's a another big advantage of commutation, particularly if by the age of 67/68 there's potentially also an AFPS 15 pension to consider and perhaps private pensions on top....
I am wondering about the effects of commutation. Rough figures from my AFPS75 pension as follows:
Standard option - annual pension £24000 plus lump sum £72000
Commutation option - reduced pension of £19000 until age 55 to generate additional lump sum of £28000.
If I'm calculating it right, the first option uses £552000 of my lifetime allowance [(24000 x 20) + 72000] whereas by commuting I only use up £480000 [(19000 x 20) + 72000 + 28000].
Is that also your understanding?
If so, it's a another big advantage of commutation, particularly if by the age of 67/68 there's potentially also an AFPS 15 pension to consider and perhaps private pensions on top....
Last edited by Sketretal; 11th Jan 2023 at 16:11.
I think you have your terms mixed up. You say Annual Allowance but lay out your Lifetime Allowance numbers. I dont think that's the right methodology for calculating your Lifetime Allowance when you have commutated as I understood it made little difference to the allowance. However, it's a no brainer if you leave early on 75 and you have another income stream. The tax free lump works best versus a taxed (at your respective top rate) slightly bigger pension.
Incidentally if have started to get your immediate pension the proportion of your Lifetime Allowance used up should have been sent to you on one of the bits of paperwork you have. I don't recall the exact numbers my partner had but with a fully commutated lump sum which came to 100000, this was equivalent (with the reduced pension) to 37%.
Incidentally if have started to get your immediate pension the proportion of your Lifetime Allowance used up should have been sent to you on one of the bits of paperwork you have. I don't recall the exact numbers my partner had but with a fully commutated lump sum which came to 100000, this was equivalent (with the reduced pension) to 37%.
Sketretal - there are factors applied to the way that your resettlement commutation is calculated for AFPS75 to allow for LTA. Some detail here: https://assets.publishing.service.go...IONFACTORS.pdf
NATOPotato - sadly various Governments have agreed to rob tax our pension arrangements over the years. In 2006 LTA was £1.5M and so it didn’t affect most of us (apart from CDS), then by 2011/12 it was up to £1.8M before the gradual reductions happened. It was only really when it got to about £1.25M that any of us started noticing in 2014/15. Now it reduced to £1M in 2016/17 and then went up with inflation to £1.073M by 2020/21 and then it was frozen. Now with eye-watering inflation it is really starting to bite.
There are many reasons for thisgrab taxation of pension - economic challenges from the 2007 crash, “Austerity”, Brexit, COVID, Russia vs Ukraine, etc… etc… But the bottom line is that it affects a small, say 3-5% of the population, and so most politicians don’t care right now. I think that is starting to shift as they are seeing more people quit their well-paid jobs (inducing a “brain drain”) that is starting to see fewer, Doctors, Judges, Lawyers, VSOs, high-end Civil Servants all starting to quit early. When the wheels start to come off of the wagons that these folks support, just maybe then we’ll see the politician’s and HMT’s ears starting to prick up.
But until that happens, if it does, then we just have to suck it up…
There are many reasons for this
But until that happens, if it does, then we just have to suck it up…
In addition, as one of the cohort who was barred from transferring to AFPS 15 due to age at the time, my pension calculator is currently only showing 1 year's service on 15, when I might be entitled to a total of 9 years - so it could get worse.
Anyone got any suggestions on how to minimise the tax bill?
With the caveat that your question is "minimise tax bill" and not "maximise net benefits" (which requires a much deeper analysis!), I offer the following:
1) ET one day before your end of service date and elect to take AFPS15 from the earliest possible date, meaning that as much of your benefit as possible is taken as an AFPS15 EDP. Neither the lump sum nor the ongoing payment is classed as a pension and therefore neither is assessed against the LTA. You will still be subject to a benefit crystallisation event at state pension age when your deferred AFPS15 pension kicks in, and there is a risk that its CPI indexing will have outstripped any increase in the remaining portion of your LTA, but at least it kicks the tax bill down the road. Conversely if you serve to your end of service date and/or elect to take as much AFPS75 as possible, all of your benefits will be classed as a pension and therefore assessed immediately against LTA on retirement.
2) Get divorced pronto and transfer some of your pension pot to the ex under a pension sharing order before the LTA assessment is made. Hope that the tax man doesn't ask questions if you reconcile and remarry a few years later...
1) ET one day before your end of service date and elect to take AFPS15 from the earliest possible date, meaning that as much of your benefit as possible is taken as an AFPS15 EDP. Neither the lump sum nor the ongoing payment is classed as a pension and therefore neither is assessed against the LTA. You will still be subject to a benefit crystallisation event at state pension age when your deferred AFPS15 pension kicks in, and there is a risk that its CPI indexing will have outstripped any increase in the remaining portion of your LTA, but at least it kicks the tax bill down the road. Conversely if you serve to your end of service date and/or elect to take as much AFPS75 as possible, all of your benefits will be classed as a pension and therefore assessed immediately against LTA on retirement.
2) Get divorced pronto and transfer some of your pension pot to the ex under a pension sharing order before the LTA assessment is made. Hope that the tax man doesn't ask questions if you reconcile and remarry a few years later...
R F, Easy Street has made some great pertinent points on this subject lately. In addition to his comment above, take a look at his post #44. There is no possibility of getting a lower pension when you break AA/LTA provisions than you would if you did not - your pension will just grow at a slower rate and under AFPS 15 there is no limit to the number of years you can ‘put in.’ Under AFPS75, when you hit 34 yrs (for most this was ages 21 - they got you for free in pension terms if you did not go to university/poly - through 55, hence the 34-yr limit for officers as we allegedly left as ‘one club’). With all today’s 75/05/15/FTRS options there are now several ‘clubs.’ Through my own lens AA was never a factor as I plodded up the chain but as I breach my LTA (some still have Individual Protection 16) in two months I will get a £2500 pa fine in perpetuity that will never be recorded as pension in-payment (taxed) and will always be more than if I had left in order to avoid the LTA fine/tax call it whatever upsets you least. Easy Street’s #44 is on the money as our ‘whining’ will be viewed as a top of the pile ‘first world problem’ and treated with the disdain some will perceive our benefits…. HNY and enjoy yours, but live as long as you can to make No 11/HMT pay for the privilege;-)