Guidance

Armed Forces Pension Scheme 2015: guidance

Updated 4 November 2015

Introduction

The new Armed Forces Pension Scheme will be introduced on 1 April 2015. All service personnel who are members of an Armed Forces Pension Scheme and who will be serving beyond April 2015 will be automatically transferred to AFPS 15, unless they qualify for transitional protection which is explained in more detail below.

Background on the development of the new scheme

In 2010, the government asked Lord Hutton of Furness to chair the Independent Public Service Pensions Commission (IPSPC). The IPSPC made its final report on March 2011 and recommended changes to all public service pensions, including those for the Armed Forces. The government set out its preferred scheme design for public service pension schemes in the HM Treasury paper ‘Public service pensions: good pensions that last’ in November 2011.

New pension scheme: latest stage

Latest stage of development

MOD remains on track to provide AFPS 15 as planned and is now engaged in establishing a Pension Board in accordance with the Public Service Pensions Act 2013 and designing a new Armed Forces Redundancy Scheme, to accommodate AFPS 15.

The main features of AFPS 15 can be found in the final scheme agreement.

MOD recently launched a video explaining what the new Armed Forces Pension Scheme (AFPS 15) means for service personnel. The video can be found on this page in the ‘further information section.

Accrued rights to existing pension benefits

Rights to pension benefits accrued by service personnel as a result of their membership of current pension schemes are protected. This means pension benefits already earned in current schemes, up to 1 April 2015, will be guaranteed. Service personnel will be able to draw that proportion of benefits at the same age as now (in accordance with current scheme rules) and they will be linked to the final pensionable salary at the date of leaving the services, not the salary/rank at the time of transfer to AFPS 15, thereby maintaining their final salary link.

Transitional protection

The government has offered transitional protection for those who were within 10 years of their respective scheme’s normal pension age (NPA) on 1 April 2012.

AFPS 75, AFPS 05 and FTRS 97 (full commitment) have a NPA of 55. RFPS, FTRS 97 (on limited or home commitment) and NRPS have a NPA of 60.

This means if you are a member of AFPS 75, AFPS 05 or FTRS 97 (FC) and were aged 45 or over on 1 April 2012, you will stay on your current pension scheme and your benefits will be unaffected.

If you are a member of the RFPS (including those on additional duties commitment), FTRS 97 (on LC or HC) or NRPS and were aged 50 or over on 1 April 2012, you will remain in your current pension scheme and your benefits will be unaffected.

This transitional protection was a government decision for all public service schemes, for those personnel who were nearest to their NPA and who will, therefore, have less time to adjust their financial plans in response to the changes to their pension scheme. About 7,800 officers and 7,000 other ranks will benefit from transitional protection.

Pension forecasts

The Online Pension Calculator has been upgraded and will now provide a forecast for the majority of regular service personnel of the pension and non-pensionable benefits that you will receive under AFPS 15, as well as the pension benefits that you have accrued under the existing pension schemes.

Consultation

The Future Armed Forces Pension Scheme (FAFPS) team conducted a 2 phase consultation during the design phase of the scheme. The initial phase in early 2012 gathered the views of service personnel and other interested parties via an initial consultation document, questionnaire, focus groups and briefings.

The final phase, concluded in September 2012, and involved the publication of the Ouline scheme design document, an accompanying video and a further opportunity to submit views through a consultation site. In excess of 25,000 service personnel participated in both phases of the consultation and their views contributed to the design of AFPS 15.

A 2 phase legislative consultation on the draft pension scheme and EDP regulations exercise concluded in July 2014. The AFPS 15 regulations were laid in Parliament in September 2014.

Legislation

The Public Service Pensions Act 2013 granted powers to the government to close existing pension schemes to new members and transfer existing members to the various public schemes including AFPS 15 unless they qualified for transitional protection.

MOD has conducted an Equalities Impact Analysis on the AFPS 15.

The Government Actuary’s Department has produced a report into the cost of the final scheme design. See the ‘Cost of final scheme design’.

AFPS regulations

The AFPS 15 Scheme legislation consists of 2 documents, laid in Parliament on 4 September 2014:

Note: (whilst the name of the scheme refers to the date it was introduced (2015), 2014 relates to the year in which the Pension Scheme and EDP Legislation was laid in Parliament).

In the event of any dispute over your pension or related benefits, the appropriate legislation, as detailed above, will prevail over the information contained in a JSP or any other supplementary guidance

Further information

Further information can be found in frequently asked questions (FAQs). These FAQs will be regularly updated as further detailed issues are finalised and in response to queries and feedback.

The video below, ‘Thinking about your future’, provides you with important information about AFPS 15 to help you understand the main features, how you can find out what it means for you now and when you leave the armed forces.

AFPS 15 video

The Future Armed Forces Pension Scheme (FAFPS) team leads on the strategic policy development of the new scheme. The FAFPS team is led by and includes officers from all 3 services, all of whom have experience in pay and pensions at MOD level. If you think the team has overlooked a policy issue, you can email them via the FAFPS group mailbox at AFPension-Policy@mod.uk, however, Veterans UK should be the first port of call for individual queries.

The FAFPS team are not financially accredited to give specific individual advice; should you feel this is what you need, you should contact an independent financial adviser. The Services Insurance and Investment Advisory Panel (SIIAP) can give specialist independent financial advice to service personnel.

The Forces Pension Society (FPS).

Conclusion

The new Armed Forces Pension Scheme will remain among the very best pension schemes available. It will remain a defined benefit scheme, which means it will keep a guaranteed level of pension, calculated as a fraction of a service person’s salary, not an uncertain amount based on investment returns. It will also continue to provide valuable benefits, like ill-health and dependants’ pensions.

The service chiefs have endorsed the new scheme as one which meets the armed forces’ recruitment and retention needs, while striking a fair balance between providing proper recognition of the unique commitment made by members of the armed forces and the requirement for an affordable and sustainable scheme that is fair to the taxpayer.

The Forces Pension Society says: “I believe it is probably the best proposal out of all the public sector scheme choices in terms of a complete package. … in overall terms I am 100% sure that the scheme on offer is as good as the armed forces could have hoped for…’ (see Pathfinder magazine for full article.)