HM Forces GIP + Immediate Pension

Ivrytwr3

Anyone want to have a go at solving a pension calculation that for me is akin to the recent GCHQ christmas quiz?!

So, a member of HM Forces qualifies for an Immediate Pension and a Guaranteed Income Payment (GIP).

Adjustment of GIP when Armed Forces pension payments paid

The GIP reflects the lost earnings for the individual in terms of both salary and pension; therefore it is adjusted to take account of payments received from AFPS 75, 05, 15.

Where an individual receives an ill-health pension for the same injury for which their GIP is paid, all of that pension is taken into account in the payment of GIP. If an individual receives a pension which is not related to the injury for which the GIP is paid, 75 % of the amount of pension paid is taken into account in the GIP. The rationale for the different levels of deductions when calculating the GIP recognises the different tax statuses of these awards. AFPS ill health pensions are tax-free, other AFPS payments are taxable. The 75% deduction for taxable awards means the GIP is enhanced by 25% of the taxable income.

Pretty picture:



Details of the scheme:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/485419/20151203_-_JSP765_FINAL-Official.pdf

GIP table:

http://www.infolaw.co.uk/mod/docs/AFCS-2015-04-06.pdf (pg 88)

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Using the info above, my first calculation:

The amount of GIP is calculated as follows:

The GIP factor for a person aged 44 is 0.897. Salary x GIP factor i.e. £38215 x 0.897 = £34278.86

As the injury is in tariff level 10 (30%) the person will receive 30% of the maximum GIP, so the annual GIP is calculated as £10283.66 a year.

However, the IP we spoke of is currently £11.5kpa. So:

If an individual receives a pension which is not related to the injury for which the GIP is paid, 75% of the amount of pension paid is taken into account in the GIP.
IP: £11500
75% of IP taken into consideration = £8625

So my magic figures:

GIP £10283.66
-
75% IP £8625
= £1658.66

Individual would leave with a total IP of £13158.66.

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Second set of figures go totally pear shaped:

The GIP factor for a person aged 51 is 0.781. Salary x GIP factor i.e. £38215 x 0.781 = £29845.92

As the injury is in tariff level 10 (30%) the person will receive 30% of the maximum GIP, so the annual GIP is calculated as £8953.77 a year.

IP: £13525
75% of IP taken into consideration = £10143.75

So,

GIP £8953.77
-
75% IP £10143.75
= MINUS -£1189.98

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Example from the scheme booklet:

The amount of GIP is calculated as: Salary X GIP factor = £42,000 x 1.000 = £42,000. As the injury is a tariff level 6 he will receive 75% of the maximum GIP, so the annual GIP paid is £31,500 a year. He has a civilian occupational pension of £25,500 per annum and the GIP takes account of 75% of this figure. Therefore the award is adjusted accordingly: £31,500 less 75% of £25,500 (£19,125) = £12,375 pa. He therefore receives an occupational pension of £25,500 enhanced by a GIP of £12,375.

This example confirms my first calculations process (i think!) - the extra £1658.66 in the first example is ADDED to the IP, but what i do not understand is how this equates to my second set of figures where i have ended up with MINUS figures!

Thanks to anybody who understands this!!

Ivrytwr3

yep, i don't have a clue either!!

GunJack

try asking Molerat on here, he seems pretty clued-up on forces things

peterg1965

Crikey, that is complicated. I am in receipt of an AFPS75 pension, I have never heard of GIP and I thought I was pretty clued up. I guess it is all to with attributable injuries, AFCS and tax free elements of the pension. Not as straight forward as I though it would be/should be.

Sorry, that wasn't any help, but I am interested in the answer!