Armed Forces pension
 

So the government has said that anybody retiring in the next ten years won't be affected by any changes to the public sector pensions. Will this also be the case for the Armed Forces or will we still have the bat inserted up the one way valve?

KF

Apparently it's not a one-way valve these days - all perfectly legal...:ok:

The B Word

:yuk:

If I were a betting man, I'd say no ... someone has to pay for the better terms for the other sectors. If you believe the Telegraph, sometimes a big ask these days, but the numbers they are pushing for teachers' and nurses' pensions show quite significant rises - apparently teachers will now be able to retire on 25K and nurses on almost 23K, rises in both instances from the old schemes, all based on higher employer contributions, a higher accrual rate and later retirement giving longer to build a pot.

Somehow I can't see the AFPRB getting an equivalent deal for the Forces.

Xaffinity shortfall last month
 

Anyone else have around a 5% shortfall on their pension payment last month (not tax related)?

If the BBC politics page for 3 November is correct, it looks like we could all be in for a bigger robbery from our pensions than the RPI/CPI swindle. Essentially it looks as if the esteemed Government is considering squirming out from paying even CPI increases if it can.



"Freezing payments
The Financial Times is reporting that Chancellor George Osborne has asked officials for alternative models, including a rise in line with average earnings growth of about 2.5% or freezing some payments.

It is understood the government will have "resolved" the options by early December when the uprating of benefits is presented to Parliament.

The Institute of Fiscal Studies has calculated that the 5.2% September inflation figure will add £1.8bn to welfare spending next year.

It said freezing all benefits and pensions would save about £10bn and linking benefits increases to wage rises would save £5bn.

A further option of switching from the September inflation figure to an average inflation figure calculated over six months could save about £1.4bn, the IFS added.

'Difficult decisions'
During a visit to RAF crews in Lincoln, Mr Clegg said: "I think we all know that we are having to do something extremely difficult.

"But we have been very, very clear, we're not going to balance the books on the backs of the poor. That will remain our guiding principle as we continue to take these difficult decisions in the weeks, months and years to come."

Liam Byrne, shadow work and pensions secretary, said: "Pensioners up and down the country struggling with rising heating bills and worried about the winter ahead will now be worried sick about rumours that the Tory-led Government is about to bin its commitment to triple lock the increase in pensions.

He called for Work and Pensions Secretary Iain Duncan Smith to "come clean" about whether the triple lock was government policy now and next year, or another broken promise.

The coalition's so-called "triple lock" policy meant that from April 2011 the basic state pension would rise each year in line with average earnings, prices or 2.5%, whichever was the most.

In 2011, the relevant measure of price inflation was the retail prices index but from next year it will be the consumer prices index."




Has anyone heard what progress has been made in the High Court in the RPI/CPI court case? - it has all gone deathly quiet for over a week!

Isn't the AFPS a public sector pension scheme and therefore the 10 year retirement rule applies?

Yes, the 10-yr rule should apply but the catch is going to be that the AFPS05 retirement age is formally 55 (your actual or planned preserved pension receipt date probably won't be counted) so you will have to be 45 by Apr 12 in order to be elligble for special treatment. Otherwise IMHO you'll be shafted just as bad as the rest.

People aren't staying in as long - the career profile is changing radically, so is that 45/10 figure as relevent to someone in their 20s or 30s as it may have been 25 years ago I wonder? Another complication is AFPS is paid for by general taxation and has to fund the Armed Forces Compensation Scheme, which is far more generous than it has been in the past. That particular demand on AFPS coffers is going to soar over the next 30 years and its a hidden cost of the scheme that tends to get forgotten.

You could argue that the need to be pragmatic is stronger than it is with other sectors of the public pension world. The MoD pays 37% or so of officers' salaries and 21% of salaries for ORs into the scheme, rising to (on average) 34% over the next three years. So, does it want people staying in as long as before? Probably not..? Thankfully (for the MoD), most people seem happy to serve fewer and fewer years (hence my first point).

And for those that stayed on AFPS75 is there any difference?

Changes to the Armed Forces Pension Schemes
 

The plan is that in 2015 or 2016 (at the latest) the Armed Forces Pension Schemes will close and all serving personnel will be transferred to a career-average scheme. The Forces Pension Society has not yet seen the framework document for the proposed scheme. When we have seen it, we will be putting it on our website (The Forces Pension Society) and will put something on ARRSE, Rum Ration, E-Goat and this site.

The Forces Pension Society will be working hard to ensure that the Armed Forces get the best possible scheme.

PC,
Not me. Exactly the same for the last 3 months :ok:

Nor me - no change.

I am still on AFPS 75 and hit 50 in May 2016 - got to be my bingo for banging out.

Big rumour, coming from ACOS Manning, is that under the new scheme you'll be out at 55 with your gratuity but not get your pension until 60.

Where's that yellow & black.....

Am I right in thinking that after the age of 50 you can apply to leave with 6 months notice? Almost like a variable option point and not the same as having to PVR? Just seem to remember this being mentioned some time back. If so, and there really is going to be a 5 year wait for your pension, I doubt there would be any old timers left in by the date it kicked off.

Also understand that already accrued pension values would apply up to the date of changeover, so would that also include commencement date?:ugh:

It is the later of age 50 or 30 years service.

So they are going to make you retire at age 55, sure there is something about making you retire at a particular age, and make you wait until you are 60 for your pension? Not good news.

Unless of course you qualify for your pension and have an option point before the new pension scheme comes in. Briefing we had at Shriv was that they can't take anything off you already earned - and that includes an immediate pension. It would be anything earned after the transfer to the new scheme which would be payable at 60 rather than the whole pension.

So if you have an option point 2014/15, I think an awful lot of people will be looking to bank what they have before they find themselves scrabbling round for a job at 55 whilst waiting for the pension to kick in. The cynic in me says any such scheme to stop you taking your pension at 55 whilst leaving you trying to find a job is a deliberate ploy to get people to either PVR or leave at an option point so they don't have to pay redundancy.

So if you were 53 at the change over in 2015 would you get what you had earned up to that point at age 55 with the rest coming to you at age 60?

K_F

That has always been the stance with regard to any terms and conditions. What is already banked will be delivered on time; it is the serviceman of the future that will have a different career to today, those mid-career will have a slightly modified one and those in their latter years will not give a toss.

Of course the gloves are off when viewed from the perspective of a bankrupt government, but the so is immunity from anarchy. ....and I fear that within the civpop the touchpaper awaits.

Kreuger,

That's the way I understand it - you'd get what you earned for your service up to 53 when you left service, and assuming that was at 55, the remaining 2 years pension would be based on the new career average scheme and paid at 60 - effectively a second pension.

But I would say that I'm not an adviser of any kind, so you might want to get that confirmed by someone actually qualified to talk pensions. (Although I am hoping I'm right, otherwise it's going to be a bumpy ride!)

My advice remains the same as it always has.

When it comes to pensions...

1. Trust no ****er.
2. Read everything.
3. If in doubt (any doubt) bank what you have, select ****ing off devices to fine pitch, and exit stage left into the sunset, middle digit at maximum extension.
4. Trust no ****er.

PS

I love a mixed metaphor.

good effort VG 10/10 :ok:

Nope...not even close!

Comparitively speaking, the armed forces pension scheme is a Rolls Royce of a scheme. The vast majority of people in UK PLC don't even have a pair of roller skates when it comes to retirement. Most UK public sector schemes are pretty damn good and the armed forces one is as good as any and better than most.

Show a little perspective please....:=

Indeed - couldn't agree more with this..

Kreuger, your post last night is about right and there will be ringfenced rights, but hey - who knows what tomorrow brings with this bunch? Will there ever be an end to this dreadful mismanagement? I would like Rutland to declare UDI and be done with it, I'm just so fed up with paying taxes to people I wouldn't trust to run a coffee swindle. I even had a client ask me last week about transferring an accrued AFPS 'pot' to a private pension (NOT a good idea in that instance I should add) in order to protect it from future uncertainty - that question would have been unheard of a couple of years ago.

There is much that those guys on your sqn could be doing to protect themselves. However, the g'ment is saying that it is that short of money that the National Employmment Savings Trust (NEST) pension scheme could be deferred. If those mates of yours were 50 and working for some civvy organisation, they would be even more seriously stuffed - paying through the nose to offset the start up costs for an expensive scheme and then retiring before the costs are reduced :ugh:. But I hope they are thinking beyond their AFPS entitlement to offset and mitigate potential bad news.

Servicemen and women in their 40s/early50s have some really difficult (easy maybe?!) decisions to make right now.

Actually Al, I see it as an easy decision for the 30/50 year olds:

If you're 50'ish now then leave at 55 with 90% of the originally expected pension and have a minor top up at the age of 60. You will be pissed off and angry but it's managable and obviously, you will have already made the decision at your 44 point that you preferred to stick with the RAF till the end and not go chasing a decent second career while time was on your side.

If you're 30'ish now, then continue to enjoy what you can and maybe consider staying to your 38 point. But at that stage, you will be fully focussed on your second career in life with a view to rising up some civilian promotion chain to a reasonable level of responsibility and working till the age of 65/66. Dare I say it, regardless of rank, you would be almost foolish to stay in.

As for the 40'ish year olds, I think a significant number would go at the 44 point if that date is to the left of the new policy start date and the rest will be looking to get out as soon as the jobs market will allow. No doubt, there will be lots of head scratching over the (previously unexpected) need to make a big life decision but this is the group that will be most drastically hit.

As for the future of the RAF, only the losers will stay past 38/44 with even worse leadership from above. They will probably be the same people who leave at 55 and sign straight on the dole, having spent their entire gratuity on reducing the mortgage.

Just seems to me like an amazing hole that Hutton/Govt/MOD have not taken into consideration. The Armed Forces Normal Pension Age will move from 55 to 60 to reflect the unique characteristics of their service but the retirement age will remain at 55. Surely, the 2 are inextricably linked?

This is massively scary. Yes I think we will have to contribute more in the future for our pension fund. But no lump sum or immediate pension if you PVR before 55, or no pension between 55 & 60 when you will find it hard to get a second career! This equates to an enormous loss of future earnings you plan all your service life to get to say: help buy a house, reduce the mortgage when you leave the service or put your kids through University.

People mention that everyone in the country is being affected by pension changes so why should we complain about our ‘gold plated one’ being changed. True but reason this: How many other jobs do you willingly let yourself be put in war zones, moved around every few years or be deployed at short notice for long periods. All of this is also sharply endured by friends and family?

I hope we just get increased contribution with those currently in the service able to keep their immediate pension and lump sum both on PVR or at 55. If not I feel there may be a rash of experienced, skilled, previously loyal 38-53 year olds opting for PVR before any changes occur.

:(

TOFO stated:

True, I have just retired, full stop. My 16 years of RAF service gives me twice the pension that my 16 years of Civil Service pension does - and this for the same final equivalent rank!!

{yes, I know the civilian equivalent rank thing is Bo**ocks but it is the only comparison I have}

Are you doing salary sacrifice?

The employer is putting in, erm.. nothing? Out of interest, is this something it is now pushing out to the whole workforce after having done nothing previously?

Returning to the opening lines of this thread. That statement is completely at odds with the rumour that all SP will have to transfer over to a new system around 2015/2016 resulting in a lower figure for final pension. Even worse, with the reduced amount you will receive at 55 and a gaping 5 year hole!

Maybe,whoever in the MOD is tasked with looking at the new scheme needs to sit on their hands for a while. Or someone needs to ask the Pensions Minister for an example showing how a 45 year old SP will not be financially affected over the next 10 years...

I'm no fan of getting a smaller pension but we need to face a few facts. The figures quoted earlier for the percentage of our salaries the MoD pays for our pensions are actually too low. No civilian employer pays anything like this and we pay nothing (well, maybe the AFPRB abate our pay a little - but it is only a little). And that money is not at the mercy of the financial markets as we have a defined benefit scheme which can only be changed by legislation. Given that the Armed Forces have a few friends and a pretty good rep I know which one I would rather take my chances with.

Now it happens that our employer can no longer afford to pay quite such staggeringly generous amounts, and Lord Hutton (a Labour peer by the way) has told them that they shouldn't be trying to any more. So we are going to get less in future, which isn't great, but we need to wake up and smell a bit of coffee here. I've noticed the world economy teetering on the brink of disaster, which is a teeny bit relevant. We have been told that those currently serving will keep whatever benefits they have earned from the current scheme, and maybe this new '10 year' promise will make things less painful still. And you can be damn sure if you jump ship over this, the new deck you land on will be lower than the one you left.

Happy retiring!

Retiring 2012 / 2013 on 05 scheme - good news!
 

Just read the latest edition of Pennant the magazine of the Forces Pension Society. On page 26 there is an article on "Dynamising" basically it explains how due to the lack of any current salary increases for serving members, those members retiring 2012 / 2013 could find themselves in a "Pension trough" and how the FPS has managed to negotiate the same increases in their pensions that individuals who retired before the pay freeze are entitled to. So you may not be getting a pay rise whilst still serving but you're pension is rising. Unfortunately I can't get a copy of the article, but if you are retiring in the next 18mths or so then this article will make pleasant reading! Well done to the FPS:D

I am very worried by all of this. My 16 year point is 2017 so I was going to leave at aged 38 and become a teacher with the pension topping up the wage. If the pension changes in 2015/16 this would cost me many thousands of pounds. The only hope I have is I will still get an IP at my 16 year point but only 14/16. I think it will be very harsh for them to say I wont get anything for another 30 years. If this is the case and it is released next year I will go asap.

Lunch

What the article is saying is that an individual who left on "05" scheme full pension in 2010, would be entitled to an annual CPI rated pension increase in both 2011 & 2012. So his pension will be more than another individual retiring at the end of March 2013, creating a "Pension Trough" for the later retiree. The FPS has convinced the MOD to introduce "dynamising" into the scheme thus protecting personal who retire in the period 2011 - 31 Mar 2013

So a Sqn Ldr who retires on 31 Mar 2013 would retire on a salary of £56,500 the same salary as a Sqn Ldr who retired in late 2010 but who is benefitting from the increases of CPI inflation in 2011 & 2012, so his actual pension will be more than the Sqn Ldr who has retired 2 years later.

He quotes an inflation increase of 3.1% in 2011 & a estimated increase of 3.9% in 2012, on a compound basis this would be a 7.1% overall increase, and a gives the later retiree a "new salary rate of £60,523. This means our Sqn Ldr will receive terminal benefits 7.1% greater than otherwise have been the case."

Sorry if this hasn't made it any clearer but if you can IM me I will send you a photo of the article which hopefully you can expand and read. The other option is to join the FPS at £16 a year and read the article online.

So why is this limited to the '05 scheme?

Once,
I am only guessing, is it because 05 is a final salary calculation whereas 75 is a representative salary?

Al R?

JTO,

It's all to do with the way that your Final Salary is calculated under AFPS05. When 05 was being formulated, the FPS lobbied that it should be "dynamic" over the last 2 years. As I understand it, this principle was adopted by the MOD/government and written into AFPS05; but AFPS75 remained unchanged.

As far as I can make out, when you retire as a member of AFPS05 your pension is worked out as follows:So anyone on AFPS05 retiring over the next couple of years will be better off than they expected. :O

The downside is that, if the Armed Forces were to receive an above-inflation pay rise after the pay freeze gets lifted (you can always dream - but it happened in the late 70s), then AFPS05 members retiring soon afterwards wouldn't see it reflected in their pensions. :*

Dynamising
 

The 75 scheme works on pension codes and pension codes are linked to pay. Thus when inflation runs ahead of pay rises, like now, a pension trough occurs.

When MOD were designing AFPS 05 the Forces Pension Society put a lot of pressure on MOD to build in a mechanism which would afford some degree of protection against pension troughs.

In the 05 scheme you work out pension based on Final Pensionable Pay. That is worked out by going back three years, inflating pay more than a year ago by inflation, and looking at which are the best 365 days consecutive pay. In 'normal' times, the best 365 days pay will be the final year - but these are not normal times.

Thanks for the extra info, but I still have one question that I would like the answer to. So if "dynamising" is going to increase the pensions of those retiring in 2011 - end of March 2013, will it also increase the lump sum by the same ammount, or is it just a pension increase?

I am getting wishful here rolleyes:

Sloppy,

Sorry - no idea! Dynamising pensions is pretty normal - pensions are calculated by adding superannuable income and multiplying it by a factor. That Dynamising Factor (the DF) is then applied to each year’s earnings to take them up to a current value. For example, a factor for 1980 might be 5 (+). So someone with earnings of £20,000 in 1980 would equate to £100,000 (+) in today’s terms.

Patricia Hewitt got dragged over the coals by GPs a while back in respect of her buggering about with their DF - I think I'm right in saying that the GP factor is currently CPI +1.5% per annum. But what FPS has been doing recently is something I'm not familiar with at all, sorry. Having said that, it knows the scheme inside out so I'm sure they're lobbying with guile and insight!

FPS - £16 pa - bargain. :ok:

Armed Forces Pensions
 

I can confirm that, when the pension is dynamised, the lump sum is three times the higher amount.

The only times I can think of that the lump sum is not three times the pension are:

- if an AFPS 05 lump sum is inversely commuted (given up in favour of an increased pension);
- if an AFPS 05 pension has been allocated by the member for someone who is financially dependent upon him or her; and
- where a court makes an order following a divorce.