New Pension Scheme
 

Has anyone any details of when the announcement of the new pension will be available. I thought that we would have been given the information by now. Were we not promised an individual assessment showing the 'benefits' or not of the new scheme.

The FPS 2005 will be available on or around the 06 Apr 2006. It is here now..in effect, as all those joining the services from that date will be on that scheme and has therefore been enacted by parliament. All the details are on the MOD web under JSP 764 or 794..I believe the former is the one. There are 4 Parts to the doc and gives you all the rules, formula's etc and detail you need to make a reasonable calculation.

All those on FPS 1975 will have the option to transfer between Sept 05 and Apr 06. You will have to decide which is best for you. Your admin staff can only advise you and should print out forecasts for both schemes.

Be very careful..you will only benefit from the 05 scheme IF you can be guaranteed service until age 55. Any departure before then, you will end up with an EDP and a preserved pension at 60 or dependant upon time served..not a lot!

If you are a long time server and looking at film star pensions on the 75 scheme..suggest a word with or join the Armed Forces Pension Society.

OOoops..I lied slightly..preserved pension should read 65!! ..not 60:O

In fact all those who have joined from this April are on AFPS 05..just to confirm that everyone else must decide by Apr 06.

TAC 2 - you can make a quick calculation on the 05 scheme very simply.

Assume you have given 25 years service. Take the best 365 days wages from last 3 years service, say 30K x 25 / 1/70 = £10,714.

If you serve to 55 with 35 years service; take 50% of best 365 days in last 3 years = your index linked pension. 3 x the total is your tax free lump sum.

EDP calculation is based upon 18/40; 50% of 50% preserved pension with 3 time sthat as a lump sum, until 55 when it goes to 75% and then full pension at 65.

Now I remember when the Miltary Salary was introduced - before we had free food and lodging and were paid peanuts.

Within an hour of the signal arriving another arrived stating that the new arrangments were in abeyance for WRAF Officers and RAF Officers below FLT LT.

The reason? The new deal resulted in a massive pay CUT!!

MC

Beware generalizations, while this may well be the case for the majority some other could benefit. Especially those who joined before 18 (airmen (a term that includes NCA)) or 21 (officers) as service will be counted from the say you start rather than a birthday. In addition, personnel who are paid at a higher rate than the representative salary used for AFPS75 could benefit. So if you are a FS/MACR on the higher pay band who joined when you were 16 there could be a benefit.

Finally, the new scheme offers enhanced benefits for your surviving partner (most wives survive their husbands). Whether you take this into account or not depends on if you care what happens to them when you shuffle of this mortal world.


Good advice on consulting the Armed Forces Pension Society. We had a very interesting talk by the retired General that heads it which highlighted the points above. If anyone is considering this they should seek proper financial advice (which is something that the Service is not legally allowed to provide).

I was entreated to join the AFPS but they illustrated the 'massive' loss served by a Brigadier because of the date he left the service and the huge pay rise that followed.

I wrote and said that I had little sympathy with the Brigadier who was still getting a massive pension compared with mine. I also benefited, with a birthday in April, from having my pension based on the latest pay deal.

I got a very nice letter back from the General agreeing with my points and conceding that it was not a one size suits all deal. He agreed that the 'new deal' would disadvantage everyone as the pension would be based on x/12ths of last years pay and y/12ths of this years where x+y=12 and not on the whole of this years pay.

I was still caught in the end however as I retired in October so my next pension rise was factored on percentage increase for that year.

You can't win.

Climebear,

Not a generalisation about 55 I'm afraid.

To gain the optimum benefit from AFPS 05 scheme from Apr 2005, you still need to serve to 55 ("normal retirement age")... i.e. those that have joined since Apr this year! You can no longer retire on a pension below the age of 37. Hence EDP and income (as opposed to pension from 18/40).

Individuals who elect to transfer from AFPS 75 will carry over some additional service eg complete years service from day of joining from 16 - 18 and 55 + to a max of 40 years = 1.6667% increase in PP. There may well be some real crusty's on life support machines who qual.

PA Spine / PES (A) qual persons will benefit (enhanced daily pay with IDD, incorporating flying pay at the time of transfer to the spine = film star annual wage, therefore 50% calculated for IP) providing they; time qualify for PA /PES (A) and are 55 or over.

55 is still the gotcha even on cross over. Hence my amber caption!

If you are; 40 + with 18 years service and considering an alternative career that will offer a second pension scheme and comfortable wages (e.g. airlines). It may be worth looking at transfer to AFPS 05, taking EDP with lump sum, knowing you have a tax free savings scheme in place, with lump sums at 55 and PP at 65. EDP is after a "retention pull through" (as quoted in the JSP 764).

The in service death and child benefits et al, are self funding from the reductions in PP until 65, incremental EDP etc. The AFPS 2005 is to be cost neutral.
If you cannot guarantee to hit the big 55/35, take a look at calculating benefits under AFPS 75, taking any Resettlement / Life commutations, Terminal grant and buying additional death benefit (as recommended by the AFPS on thier visit to our station) if you want to provide for the ball and chain :E

But once again I recommend the AFPS.

So what happens to an RN Officer on the FTC (Full Term Commission) who, if a Lt Cdr or below, has to retire at age 50?

!"
 

Had a very interesting brief on the new scheme and in the margins afterwards when asked about the pro's and cons go the reply
"Well I won't be changing over. The benefits of enhanced Death In service et al comes from a reduction elsewhere. The review and changes are cost neutral and the sting comes from a reduction in real terms of pension payments!"

The personal examples (if we ever get them) may be revealing - or more likely concealing!!

Oggin,

It\'s like the A25 song - the landings piss poor and you can\'t swim!

Oggin..have a good look at your benefits under both schemes first. But the problem we have found, is that every individual will end up with slightly different outcomes. Date of join, age, length of service, final salary etc etc, all need to be calculated.

Without knowing any more detail and if you (the party example stated) have to go at 50..remaining on the AFPS 75 may prove more beneficial.

There is a lot of rubbish being talked about concerning the new pension scheme, but here are a few points to consider and maybe educate some.

My understanding is that those people with the option to change to the new scheme will be receiving some paperwork in July, including I believe a personal assessment, with 3 months to come to a decision.

Do not forget that the new scheme was not designed for the benefit of people already serving, rather for new entrants off the high street. Having said that, that does not mean that some people serving, though not all, will not benefit from joining AFPS 05. I remember when the PA spine was introduced people saying "... the MOD will never change our terms of service for the better...... it must be all about saving money..... there must be a catch somewhere.....you are bound to be better off staying Spec Aircrew...etc". However, the PA deal was better, and I am very happy on it thank you!!

Back to AFPS 05. There is a very good schematic diagram of the new and old schemes (a picture paints a thousand words..) in the March 2005 edition of AMPlify, page 30. Yes, the benefits of the new scheme increase the longer you serve, and reach a maximum if you stay in until 55, but that is not to say it is a disaster if you leave earlier than then. As Muff Coupling says all the information is available on a series of MOD web pages. The calculations to work out your own situation are simple enough, but somewhat boring.

Taking myself as an example, PA spine aircrew. Say I left the RAF at 50. Lets examine my pension payments under the new and old schemes (yes I had to make some assumptions about pay rises in the next few years - I AM NOT 50 YET!!)

AFPS 75

Pension on retirement £22,100 Gratuity £66,300

Pension payments 50-55 5 years at £22,100 (no RPI)

Pension payments 55-65 10 years at £22,100 (RPI up lift and linked)


Total payments 50-65 £66,300 + £110,500 + £221,000 + RPI addition = £397,800 + RPI component



AFPS 05

"Pension" on retirement £26,200 Gratuity £78,600

EDP payments 50-55 5 years at £17,500 (66.7% of £26,200 no RPI)

EDP payments 55-65 10 years at £19,600 (75% of £26,200 RPI uplift and linked) + at 65 second tax free lump sum £78,600 plus RPI


Total payments 50-65 £78,600 + £87,500 + £196,000 + £78,600 = £440,700 + RPI component.

I have not gone into the RPI side of things, but it would appear that by age 65 I am some £40,000 better off under AFPS 05. And every year I live past 65 I am a further £4,000 (+ RPI) a year better off. True, I might not live to 65. It is also true that I do not get as much money up front with AFPS 05 as I do with AFPS 75, but am I planning on retiring at 55 or working on to 65? If I die before my wife 60% of £26,200 is better for her than 50% of £22,100.

So there are a lot of variables to consider. When I expect to leave the RAF, will I carry on working, do I need more money early on in retirement, how good is my health, does my wife have a pension, etc, etc..... These are my particular circumstances, not yours.

I guess my point is that there is a lot more to it than, .."the new scheme is no good unless you stay in until you are 55..." Do your own sums, take advice where you can, but form the informed, and then make your own decisions, hopefully wisely.

I asked this question in a previous pensions thread - I don't think a comprehensive answer was forthcoming.

From what I currently understand, EDPs from 05 replace the IP from 75. In order to qualify for EDPs you have to serve to a minimum age 40. Our current TOS do not allow us to serve beyond 38, unless assimilated onto PAS.

This APPEARS to mean that as things stand, those who have yet to reach their 38/16 point, who transfer to 05, and do not get assimilated, will get NOTHING AT ALL - at least until age 65 when full pension becomes payable. Comparing this with 75 which will give a pension of approx £11k at OF2 level, I cannot see how 05 could possibly be a good deal for anyone under 40.

Am I completely wrong about this? Or are changes in our TOS forthcoming to move 38/16 to 40/18?

16B

Biggus,

Thanks for the info. Now, let me see if I've got this right - please correct if I'm wrong. I'll use current figures and only look at pilots, but I think that similar principles apply to WSOs, Rear Crew and NCO pilots:

A Specialist Aircrew Flt Lt (if there are still any) retiring at age 55 on the top pay band would receive £24000 a year under the old pension system or £24750 under the new pension system.

A Sqn Ldr (not in the Professional Aviator Pay Spine) retiring at age 55 on the top pay band would receive £24000 a year under the old pension system or £24750 under the new pension system.

A Wg Cdr retiring at age 55 on the top pay band would receive £31100 a year under the old pension system or £32000 under the new pension system.

However, a Flt Lt in the Professional Aviator Pay Spine would receive £33600 a year if he/she joined the new pension system and retired at age 55!

Is this too good to be true? Are you sure that aircrew in the Professional Aviator Pay Spine will be invited to join the new pension scheme when the paperwork is passed around next month?

If so, apart from personal satisfaction, what incentive will there be for aircrew to work hard and get promoted? I know that they would earn more whilst they are serving in a higher rank, but unless they get promoted to Gp Capt they wouldn't ever match the pension they would get if they retired in the PA Spine! Would all the extra stress, paperwork and ground appointments be worth it?

Just what are the odds of reaching Gp Capt these days anyway?

So my 32 years of bouncing between the cockpit and the bar with no time to do OCC/ISS/C Exam or secondary duties might finally bear fruit :-)

LFFC

First of all, as PA myself, I have only really looked at my own situation. A quick look at some of the information I have has provided the following however:

AFPS 75 "...... an index linked pension worth 48.5% of representative pay......"


AFPS 05 ".... a pension worth 50% of final salary after 35 years......"

Therefore aircrew Sqn Ldrs, Wg Cdrs etc on AFPS 05 will recieve 50% of their final salary (which INCLUDES FLYING PAY!!) if they retire at 55. While I am not fully aware of Wg Cdrs pay rates I am sure a senior aircrew one earns more than £64,000 when you include flying pay (I have just checked, £64,000 is the basic pay - having trouble finding current Wg Cdr flying pay, but it was over £10,000 in 2003).

But yes, the pension at the top of the PA spine (pilots only get there) is a bloody good deal!! As for incentives for working hard, promotion, etc. First of I think all retention on the PA spine is likely to become very rare, and one will have to be hard working and well above average to achieve it. You can't just drift along and expect to make PA. Secondly a career animal is just that, and will consider the rewards worth going for without being over concerned about pension rates.



Note: The PA pilot pension may be bloody good, but the best pension deal in the country is the one that MPs have - there is a surprise!!

Biggus
 

.

Not the way I see it, unless I'm mistaken. '05 pension figures quote that the final pension ''... includes X factor, but excludes allowances or specialist pay''.

Good deal therefore for PA folk on the new scheme who stay till 55 and have pension based on ALL their pay!

Lockstock and Just this once....

It would appear that you are both correct, in that 'aditional pay', e.g flying pay, is indeed not pensionable under AFPS 05. Sorry if I caused any confusion.

I posted my reply to LFFC early this morning, when I was in a rush to get to work. The quotes I gave were from the only document I had immediately to hand, and are taken straight from the source (the articule in AMPlify). They are correct quotes. However, the phrase used in the MOD pensions website refers to '.. pension based on final pensionable salary (i.e excluding additional pay)...' for AFPS 05. That one word pensionable making all the difference. Indeed one of the questions in the Q & A portion directly asks about additional pay, and the reply makes it clear it is not pensionable. So I was wrong in my statement, apologies.

I am sorry if I have caused confusion. I am PA spine myself, and have only looked at AFPS 05 from a personal view, as indeed I suspect most people have/would, rather than an overall one. If that makes me sound 'jack' I'm afraid I haven't got enough spare time to become a pension expert for everyone. Hopefully my point, that people need to look at the new pension based on their own individual circumstances, and it is not necessarily bad news for all, is still valid!

LFFC

I am on a multi engined fleet with a large range of ranks within the crew, maybe even the same fleet as yourself, and recognise most of the extremes you mention. Unfortunately the RAF has always had disparities of pay within the same aircraft, which does not of course make it right. My pay and pension conditions are better than some, maybe most, of the people I fly with, but not as good as all. There are inequalities within the PA system, e.g maximum levels various trades can reach on the spine, but I have to live with what is on offer. While it may again sound 'jack', I did not create this situation, but given the option of selecting better terms of service (e.g the switch from Spec Aircrew to PA, the possibilty of an improved pension scheme) I defy anyone not to go for what is best for them. Indeed I would encourage anyone to do so. Encouraging people to select the best pension option for themselves was the reason I started writing on this thread in the first place!

Nice to see all you guys waking up to the complex, and sometimes unattractive, reality surrounding the new pension scheme offer. Personally, I think the whole pay. additional pay, allownaces and pension system is rapidly turning into a dog's breakfast. Is it good for unit cohesion? Definitely not, but neither was the first split of flying pay rates, which started the rot. However, for those who shed doubt, there is no reason to believe that current PA wil not recieve the full pension offer.

Ginseng

Biggus,

I think you got Just This Once and I mixed up; I'm not in the multi-engine fleet. But thanks for taking the time to answer, I'm not surprised that you made a mistake this morning - the whole issue is quite unclear at the moment and I'm struggling to understand it as well.


Lockstock,

Yes, that's the way that I see things too.


Just This Once...,

I don't think that there are any proposed changes to the treatment of flying pay for Career Spine aircrew with regard to pensions. However, as PA Spine pay does not include any "allowances or specialist pay", I'm assured that all of it will count towards pensionable final salary.


Specaircrew,

Yes, it certainly does look like you've hit the jackpot - personally, I think you deserve it. But I wonder how all the Career Stream aircrew, who may have worked even harder than you to fit in all that OCC/ISS/C Exam stuff, will feel if they don't get a chance to move to the PA spine too? I feel very sorry for them and won't expect too much sympathy (or much else) from them in the future - but I'm sure that senior officers will rise above that sort of thing!


Ginseng,

I agree with you - it certainly looks like Mr C*ck-up has paid us another visit! I guess this is yet another example of two "initiatives" coming together to produce a management nightmare!

Biggus and Co....just to add fuel to the debate.

I hear that the Army have already been through the hoops on the issue of PA Spine sic Flying pay et al.

I hear that they have a few pilots who have gone onto PES (A) (RN / RAF equiv of PA Spine). Some have reached or will reach top of the spine when AFPS 05 scheme kicks in. If the JSP calculations are correct, they can walk with a Gp Capt equiv pension as Majors (Sqn Ldr)! EG - Daily rate + Enhanced rate of Flying Pay on transfer to PES (A) = same daily rate as Gp Capt on promotion in 1st year.

However, these guys/gals must have completed 5 years on PES (A) and retire at 55.

Understand that they have already asked the system..you only need to be on AFPS 1 day to qual for it and for full benefits. So retention scheme pfaff..age 55 in 08, top level on spine...resign faster than Labour can raise the higher tax bracket and jump ship! I suggest that once the bean stealers cotton onto this one..selection / transfer to spine will become a tadge harder

:(

I've been thinking about how all this might impact the RAF - it seems to me that it will certainly change a few things! For a start, I would expect that all PA Spine aircrew will opt for the new pension scheme and go for the extra £10000 a year pension and £30000 gratuity.

I was under the impression that someone on the PA Spine who PVRs would revert to the Career Spine pension. Or is that only true for the old pension system? If that is the case, then we can expect those already on the PA Spine to stick around until their retirement at age 55 - so I hope we chose the right people. Whilst that will be really good for retention, it will make it really hard for anyone else to assimilate at age 38 - if it hasn't become difficult enough already.

Career Spine sqn ldrs will be watching this of course and realise that they now have little or no chance of returning to flying duties unless they get promoted. But in a shrinking RAF, they will have little chance of further promotion unless they are really good and got promoted to sqn ldr in their 20s or very early 30s.
So I expect that a lot of them will stay on the old pension system, pull the plug quite quickly and build a new career in the airlines. And who could blame them after all their hard work had been so blatantly overlooked?

But all of this will be just another of those "transitional challenges" that will disappear over the next decade. But then again...


Just This Once...,

I'd be interested to know if your colleague, who is obviously aged between 35 and 38, decides to accept promotion to sqn ldr or goes for the PA Spine as a flt lt. I hope that he realises that his chances of promotion to wg cdr are extremely small due to his age.