Changes to 1975 pension scheme?

batesy2759

Hi,

Hope sombody can answer this !!

I joined the Army in 1989 and am therfore on the 75 pension scheme. When we all had the option to transfer to the new 2005 scheme i decided to stay on the 75 scheme as it was by far the better option (for me).

During my 18 career i have seen people retire at thier 22 year point and recieve lump sums in excess off 40 and 50 k, this is because they commuted 50% and took a greater lump sum and smaller monthly payments rather than commuting a smaller percentage therefore getting a smaller lump sum but bigger monthly payments.

I recently saw a collegue retire at his 22 yr point and he was told that you can now only commute upto 25% IS THIS TRUE, and if so can they legally change a contract that i signed in 1989.

I have planned my financial future on the 50% comutation rights, by planning to pay off my mortgage etc etc etc

If this is true what can i do to redress this issue

PLEASE HELP !!!!!

Cat695

I believe now you can commute 50% upto 2006 and then after 2006 its only 25%

Have you tried the pension calc on armynet??? try that

I leave in 2013 after 22 years and according to the pension calc i'll be getting 52K (if i stay a SSgt) if i commute all that i can (obviously that will rise with each year till 2013)

so i wouldn't worry and on the plus side you'll be getting a larger monthly sum (so more beer tokens)

however if your after a high flyer job when you get out (i'm not i'm looking forward to a chilled life) then that will bring you closer to the higher tax band if a high earner

CHR15

I know people who have left this year after 22yrs and commuted the full amount giving over £50k.

The pension calculator should be your first move.

http://www.mod.uk/DefenceInternet/AboutDefence/WhatWeDo/Personnel/Pensions/ArmedForcesPensions/PensionsCalc/

I just tapped a few figures in and it all looks the same to me.

Alias_Omega

Here is the link for the armed forces pension calculator.

http://83.138.137.164:8080/WizPersonalDetails.aspx

This will tell you all that you need i guess.

batesy2759

Im a WO2 and will be on the highest level (level 7 now but will be on level 9) and on higher pay band when i leave.

On this calculator do you add the Terminal Grant figure to the Max commutation lump sum figure ?

I hope so, as this works out at £55,713 total lump sum with a monthly payment of £9,898

does that sound about right ??????

CHR15

Yes, that sounds correct (although it is a yearly pension payment of £9,898 lol ).

Ivrytwr3

with a monthly payment of £9,898

Ah! WO's bless. Back behind your desk with your pipe and slippers please.

(Sorry Sir!! )

EmmEve

9k a mth!! I nearly fainted then lol

batesy2759

Gasp !!!

I did mean annually, but 9k monthly would be very nice

joe_public_2

Under the AFPS75, when you commute your pension (maximum) all that you are doing is taking the lump sum you would have received had you completed a full career of 37 years. You then take a smaller monthly pension until you are 55 to pay it back. In effect it is a loan.

The rough figures are as follows:

When you leave the Army at 22 years you receive an immediate yearly penison of approx 32% of your final rank pay (taxable), plus a lump sum payment of 3 times this amount (not taxed).

If you left after 37 years you would receive an immediate yearly penison of approx 48.5% of your final rank pay (taxable), plus a lump sum of 3 times this amount (not taxed).

So, to cut a long story short, the maximum lump sum you can take is:

48.5% x final rank pay x 3

The figures for the AFPS05 are more complicated and I am not going to go there. My advise, use the calculator mentioned before.