Armed Forces contribution to State Pension

pinnks

Matelot_vet said:

Many thanks for all replies & explanations, there was a lot in there I didn’t know and wasn’t aware of.
I also have to say I am not alone in my naivety on the subject, there is a great many veterans out there who don’t have the level of insight on pensions that maybe they should have. Whether that’s because they ignored it or the military don’t explain it, I’m not sure. In answer to Xylophone - yes I have made some voluntary contributions to NI, which is not my issue.  I believed as many do that I had been disadvantaged by my employer; I now know from the explanations, that is not the case, so thank you.

Maybe something to raise with the RBL, or other veterans society, so they would work up an article for their respective websites?

For many ex-military, there then comes the question of taxation of their pensions, especially as many may have stayed in Germany.  That is a whole other can of worms giving rise to the UK state pension remaining taxable only in the UK, even if they have German residence, and the military pension being taxed in the UK unless the person has taken German citizenship, especially post-Brexit.  Any amounts that remain taxable in the UK must still be returned on their German tax return (if they have German taxable income) and feed into the rate at which they pay tax.  This would include the PCLS on the pension as Germany does not recognise a tax-exempt pension lump sum.  The list goes on... 

Oldvet

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.  So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

Anyone that disagress, please do show me ANY formal publication (DIN, AIN, JSP, Army Manual etc) that contradicts me

Andy_L

Oldvet said:

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.  So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

Anyone that disagress, please do show me ANY formal publication (DIN, AIN, JSP, Army Manual etc) that contradicts me

When? I've seen military pay slips that say "contracted out rate" or similar in the NI deductions row

Other public sector schemes were opted out. Its not exclusively for private pensions

Not quite. The AFPRB takes into account how much better the military pension is than other pensions (eg immediate pension, earlier NRA) to decide the abatement for the pension. Not that no employees contribution is made

hyubh

Oldvet said:

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

May sound pedantic, but it wasn't 'opting out of NI payments', it was contracting out of the State Earnings Related Pension Scheme (SERPS), then the State Second Pension (S2P) when that replaced SERPS. When introduced, SERPS wasn't to replace existing occupational pension scheme provision, it was to encourage it (contracting out reduced employer as well as employee NI), set certain basic standards (e.g. a widow's pension was a requirement of contracting out), and have a default DB pension available for workers that didn't benefit from an occupational scheme (= SERPS itself).

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

An occupational pension scheme being contributory or non-contributory had nothing to do with it being contracted out or not. Various private sector DB schemes were both contracted out and non-contributory, e.g. those for most banks.

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.

Which makes sense. Back in the day, the civil service did the same, since the Principal Civil Service Pension Scheme (PCSPS) was historically non-contributory (and contracted out). So if a role was considered equivalent to one in local government (for example), then the salary range would be set comparable to the LG one, less the 6% employee contribution that LGPS members paid.

So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

In principle, what being contracted out meant was that scheme overall could be more generous than otherwise. There was no requirement for contracted out schemes to directly account for NI savings.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

You couldn't both be a member of a contracted out pension scheme and contract in personally. I wouldn't project back the transitional arrangements implemented in 2016 - these effectively allowed formally contracted out people to accrue a level of state pension that would have been into the earnings-related part before, and so not possible when contracting out was still a thing. (Minor caveat - S2P was a bit of a half way house for lower earners. But the principle remains.)

molerat

If it wasn't for the introduction of the 2016 pension this storm in a teacup would have passed unnoticed as your pension would have been as expected.  The post 2016 rules enabled those who were contracted out to improve on that.

Marcon

Oldvet said:

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

There are no grounds at all.

Oldvet said:

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

You are confusing two different things. Payslips showed that you paid reduced rate NI because you were contracted out of the state additional pension (have a look at one if you still have one around).

Defined benefit schemes are always related to years of service, and the Army's scheme is DB. Defined contribution schemes are based on contributions - the clue is in the name!

Oldvet said:

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.  So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

Nothing was being paid into a private pension, because members paid reduced NI. There was usually no option to top up NI payments until quite recently, so putting that on payslips would have been hopelessly misleading.

Oldvet said:

Anyone that disagress, please do show me ANY formal publication (DIN, AIN, JSP, Army Manual etc) that contradicts me

Where's @Silvertabby when you need her...  Meanwhile have a read of https://forcespensionsociety.org/2021/12/the-relationship-between-armed-forces-pensions-and-state-pensions/

Silvertabby

Marcon said:

Oldvet said:

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

There are no grounds at all.

Oldvet said:

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

You are confusing two different things. Payslips showed that you paid reduced rate NI because you were contracted out of the state additional pension (have a look at one if you still have one around).

Defined benefit schemes are always related to years of service, and the Army's scheme is DB. Defined contribution schemes are based on contributions - the clue is in the name!

Oldvet said:

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.  So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

Nothing was being paid into a private pension, because members paid reduced NI. There was usually no option to top up NI payments until quite recently, so putting that on payslips would have been hopelessly misleading.

Oldvet said:

Anyone that disagress, please do show me ANY formal publication (DIN, AIN, JSP, Army Manual etc) that contradicts me

Where's @Silvertabby when you need her...  Meanwhile have a read of https://forcespensionsociety.org/2021/12/the-relationship-between-armed-forces-pensions-and-state-pensions/

The information was always there for those who bothered to read it.  Not so much in JSPs, etc, but more in the form of leaflets and information posters.  I retired from the RAF well before 2016, so can't say for sure how the new pension details were promulgated - but I'm sure they were.

What I can say for sure is that I joined in early 1978, when the new 1975 pension was still in its infancy.  Details about that, specifically re the introduction of deferred benefits for those who left with less than 22 years service, still flooded the notice boards etc.  Yet, even now, there are over 12,000 veterans out there who haven't claimed their deferred pensions.  Many because they are unaware that they have benefits due because they didn't read the information shoved under their noses.  You can take a horse to water, etc.....

I have personally told two vets ( 1 Army, 1 RAF) that they each had 12 years of pension benefits that they should have claimed at 60.  Until then, both had believed the barrack room lawyers who had told them that their 12 year resettlement grant was in lieu of pension benefits.  Clue.  It wasn't.

My job in the RAF including issuing final discharge documents and certficates.  This included a brown envelope, with pension details as they stood at that time - ie, contracted out of SERPS, so their in-service NI contributions went towards their basic State pension, but that the equivalent of SERPS would be paid with their Service pensions.  The pension folder also advised that once their pensions were due, at age 60, they would have to contact pensions with their claim.  I would stress the importance of the contents of the pensions info pack, saying that it should be kept safe for future reference.  Back to that horse again.....

pterri

Silvertabby said:

Marcon said:

Oldvet said:

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

There are no grounds at all.

Oldvet said:

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

You are confusing two different things. Payslips showed that you paid reduced rate NI because you were contracted out of the state additional pension (have a look at one if you still have one around).

Defined benefit schemes are always related to years of service, and the Army's scheme is DB. Defined contribution schemes are based on contributions - the clue is in the name!

Oldvet said:

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.  So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

Nothing was being paid into a private pension, because members paid reduced NI. There was usually no option to top up NI payments until quite recently, so putting that on payslips would have been hopelessly misleading.

Oldvet said:

Anyone that disagress, please do show me ANY formal publication (DIN, AIN, JSP, Army Manual etc) that contradicts me

Where's @Silvertabby when you need her...  Meanwhile have a read of https://forcespensionsociety.org/2021/12/the-relationship-between-armed-forces-pensions-and-state-pensions/

The information was always there for those who bothered to read it.  Not so much in JSPs, etc, but more in the form of leaflets and information posters.  I retired from the RAF well before 2016, so can't say for sure how the new pension details were promulgated - but I'm sure they were.

What I can say for sure is that I joined in early 1978, when the new 1975 pension was still in its infancy.  Details about that, specifically re the introduction of deferred benefits for those who left with less than 22 years service, still flooded the notice boards etc.  Yet, even now, there are over 12,000 veterans out there who haven't claimed their deferred pensions.  Many because they are unaware that they have benefits due because they didn't read the information shoved under their noses.  You can take a horse to water, etc.....

I have personally told two vets ( 1 Army, 1 RAF) that they each had 12 years of pension benefits that they should have claimed at 60.  Until then, both had believed the barrack room lawyers who had told them that their 12 year resettlement grant was in lieu of pension benefits.  Clue.  It wasn't.

My job in the RAF including issuing final discharge documents and certficates.  This included a brown envelope, with pension details as they stood at that time - ie, contracted out of SERPS, so their in-service NI contributions went towards their basic State pension, but that the equivalent of SERPS would be paid with their Service pensions.  The pension folder also advised that once their pensions were due, at age 60, they would have to contact pensions with their claim.  I would stress the importance of the contents of the pensions info pack, saying that it should be kept safe for future reference.  Back to that horse again.....

I nearly joined the RAF as an airframes & engines technician. I went to the recruitment office in Tottenham Court Road at 16 and a half. Passed the aptitude tests but they said give it a year to see if I was still keen. Sometimes wish I did go back. 

german_keeper

So if there were grounds for complaint, which I think most of us agree there aren't what would happen if the complaint was upheld? Maybe something like this:

MOD pension man: well member, your complaint has been upheld what do you want us to do?

Member: I want to be put in the position I would have been had I not been so hard done to.

MOD pension man: wow crikey, just give us some time do do the calculations and we'll let you know how much you owe us.

Silvertabby

pterri said:

Silvertabby said:

Marcon said:

Oldvet said:

Whilst everyone is right in that he hasnt lost out, he merely didnt dip in (to quote an earlier poster), there are quite a few grounds for complaint here, and if wanted to take this further.

There are no grounds at all.

Oldvet said:

Firstly, I was Army, and there was no information that we were on the opt out of NI payments. It wasnt on payslips, or in any DIN or publication.  Therefore the Army at least, could be argued to have not informed its employees of this, which could amount to negligence.  Further supported by the two undermentioned issues.

On joining the Army, you are told your pension was granted for years served NOT from a contribution. The opt out is for private pension schemes that then put that money into the private pension rather than the state pension. THIS is not the case for HM Forces, as you dont pay into a pension.

You are confusing two different things. Payslips showed that you paid reduced rate NI because you were contracted out of the state additional pension (have a look at one if you still have one around).

Defined benefit schemes are always related to years of service, and the Army's scheme is DB. Defined contribution schemes are based on contributions - the clue is in the name!

Oldvet said:

ALL Armed Forces Pay Review Bodies in the last 10 years have taken into consideration that you do not contribute to a pension scheme when setting the pay levels.  Therefore it has recommended a lower rate based on the benefits of getting health care, no contribution pension etc.  So this then reinforces the argument that the NI opt out wasnt being paid into the private pension, as individuals didnt contribute to a pension scheme. Either pay reviews have been incorrect and should be revisited, or they were less than honest about the pension state.

All of the above give strong grounds to take this further.  They had a duty of care to ensure it was well known, but didnt do so. It would have been simple to put at the bottom of the Pay slips each month "top up you NI contribution to ensure you receive the full national pension".

Nothing was being paid into a private pension, because members paid reduced NI. There was usually no option to top up NI payments until quite recently, so putting that on payslips would have been hopelessly misleading.

Oldvet said:

Anyone that disagress, please do show me ANY formal publication (DIN, AIN, JSP, Army Manual etc) that contradicts me

Where's @Silvertabby when you need her...  Meanwhile have a read of https://forcespensionsociety.org/2021/12/the-relationship-between-armed-forces-pensions-and-state-pensions/

The information was always there for those who bothered to read it.  Not so much in JSPs, etc, but more in the form of leaflets and information posters.  I retired from the RAF well before 2016, so can't say for sure how the new pension details were promulgated - but I'm sure they were.

What I can say for sure is that I joined in early 1978, when the new 1975 pension was still in its infancy.  Details about that, specifically re the introduction of deferred benefits for those who left with less than 22 years service, still flooded the notice boards etc.  Yet, even now, there are over 12,000 veterans out there who haven't claimed their deferred pensions.  Many because they are unaware that they have benefits due because they didn't read the information shoved under their noses.  You can take a horse to water, etc.....

I have personally told two vets ( 1 Army, 1 RAF) that they each had 12 years of pension benefits that they should have claimed at 60.  Until then, both had believed the barrack room lawyers who had told them that their 12 year resettlement grant was in lieu of pension benefits.  Clue.  It wasn't.

My job in the RAF including issuing final discharge documents and certficates.  This included a brown envelope, with pension details as they stood at that time - ie, contracted out of SERPS, so their in-service NI contributions went towards their basic State pension, but that the equivalent of SERPS would be paid with their Service pensions.  The pension folder also advised that once their pensions were due, at age 60, they would have to contact pensions with their claim.  I would stress the importance of the contents of the pensions info pack, saying that it should be kept safe for future reference.  Back to that horse again.....

I nearly joined the RAF as an airframes & engines technician. I went to the recruitment office in Tottenham Court Road at 16 and a half. Passed the aptitude tests but they said give it a year to see if I was still keen. Sometimes wish I did go back. 

They must have felt that you were too young to join then.  I think it was normal practice with those who had the aptitude, but perhaps would have struggled with the rigours of adult basic training.  Sadly many, like you, found other employment and didn't try again.   I was older when I joined, and never regretted it.  Mr S (aircraft electrician) and I did over 50 years between us.