HM Forces Pension - Added Pension

Ivrytwr3

That's what i mean - since the new pension schemes, they have become more confusing.

I can leave now or whenever with an Immediate Pension. However, since the new pension scheme was introduced in 2015, we can buy Added Pension which is payable from as what you call Normal Pension Age (NPA) which i referred to as State Pension Age (SPA) - same thing.

So my £80 per month would be payable from age 68 or whatever the age will be by that time!

So those figures don't look too then?

kidmugsy

Silvertabby wrote: »

He is looking to retire and take his pension from 50, so just 6 years rather than decades.

Yes, he can take his pension from 50 (or even now, if he wants to).

You keep missing the point. The inflation linking will survive until he perishes. It could be decades. It's therefore plausible that he'll be subject to at least one period of high inflation.

Silvertabby

You keep missing the point. The inflation linking will survive until he perishes. It could be decades. It's therefore plausible that he'll be subject to at least one period of high inflation.

I know - but I was only talking about the break even point - i.e, the time it takes to get his investment back. Obviously, the longer he lives beyond that point the better off he will be !

Al.

JoeCrystal wrote: »

Bah, it is still one of the very best pension schemes in the country and still non-contributory. Perfectly justified for the military.

Salary is abated to reflect the notional contribution.

Al.

Ivrytwr3 wrote: »

44, I'll probably serve another 6 or 7 years, risk - medium, retire - no plans as of yet.

But looking at this that everyone in HM Forces gets an extra £40 pension per year for 7 months of £80 per month contributions (approx £68 pension per year for £80 per month of contributions) - is this a worthwhile return?

The fact you e earned enough to get an immediate pension/EDP helps. But, if deferred, I'd remind anyone that the legislation surrounding AFPS 15 has a provision which links it to state pension age. A link that only has to be triggered via secondary legislation.

Bear in mind tax efficiency - do you have a partner who would benefit from pension contributions instead.. would an ISA be more appropriate, or even a personal pension for you?

Al.

Silvertabby wrote: »

Joe - absolutely. However, it's wrong to say that the Armed Forces pension scheme is non-contributory as the Armed Forces salary is reduced at source instead. In my day the reduction was 9%.

Indeed. It's now running sub c.6%.

And AFPS15 life expectancy, is..?

Al.

Ivrytwr3 wrote: »

That's what i mean - since the new pension schemes, they have become more confusing.

I can leave now or whenever with an Immediate Pension. However, since the new pension scheme was introduced in 2015, we can buy Added Pension which is payable from as what you call Normal Pension Age (NPA) which i referred to as State Pension Age (SPA) - same thing.

So my £80 per month would be payable from age 68 or whatever the age will be by that time!

So those figures don't look too then?

Bear in mind, if you leave now and don't have two years worth of contributions under your belt, your payments will be refunded.

Andy_L

Al. wrote: »

Salary is abated to reflect the notional contribution.

Not quite. The pay review body looks at how much better the AFPS is than other occupational pensions and abates salary by that amount rather than how much a personal contribution might be.

hugheskevi

But, if deferred, I'd remind anyone that the legislation surrounding AFPS 15 has a provision which links it to state pension age. A link that only has to be triggered via secondary legislation.

I thought the link was in Public Service Pension Act 2013, at para 10, subsection 3?

(3)The deferred pension age of a person under a scheme under section 1 must be—
(a)the same as the person's state pension age, or
(b)65, if that is higher

Looking at the Armed Forces regulations I only see references to deferrred pension age, as defined by the Act. I don't see any requirement for any triggering via secondary legislation - it seems to be fully in place now?

Bear in mind, if you leave now and don't have two years worth of contributions under your belt, your payments will be refunded.

In the Armed Forces rules, refunds apply if there is under 2 years of qualifying service. The regulation at para 22 of the Armed Forces regulations says:

Qualifying service
22.—(1) In these Regulations, a period of qualifying service, is the aggregate of the following
periods—
(a) any period on or after 1st April 2015, where the individual is eligible for active
membership under regulation [16] (eligibility for active membership); and
(b) for a transition member with continuity of service, the person’s continuous period of
pensionable service under a connected scheme on or before 31st March 2015.

So any service prior to 2015 counts for the 2 year rule.

Al.

Hi Hugh,

Yes, it's in place - I think we both agree on that one! The person asking the question has not yet decided to embark on the possible course of action, thereby rendering any service, pre-April 2015, a moot (two year) point.

Hi Andy,

You're absolutely correct. But I didn't suggest 'personal contribution'; rather, 'notional contribution'. The various factors aren't just confined to 'how much better' AFPS is (it's broadly in the middle, I'd venture) compared to other occupational schemes - it also takes into account X Factor.

The biggest con surrounding abatement is the one that no one discusses - not that it exists, or even that the perception is that the pension is 'free'. No. it's that one's pension is determined on one's salary post abatement, not pre abatement. The money isn't taken from you, you never had it in the first place.

The issue of abatement is a vexed one. I would also suggest that the RPI/CPI change was one of the factors which blew abatement (as well as other factors) well and truly into the weeds. If we don't see a new AFPS in the next five years, one which involves contributions, I'll eat my hat.