Armed forces pensions

Question

Accepted Answer

A world class pension scheme for your military service

When a member of the armed forces reaches their retirement age, they receive one of the most generous pensions available in the UK. This fairly reflects the unique sacrifice they have provided their country throughout their career.

All members of the armed forces are automatically enrolled into the Armed Forces Pension Scheme. Unlike all other public schemes, members pay 0% in contributions each month. The scheme is unfunded and paid from the public purse.

2015 scheme

Guidance relating to the Armed Forces Pension Scheme 2015.

2005 scheme

Guidance and documents relating to Armed Forces Pension Scheme 2005.

1975 scheme

Guidance and documents relating to the Armed Forces Pension scheme 1975.

AFPS 1975: your pension scheme explained
Pension Codes: the revised rates apply to all personnel who are members of the Armed Forces Pension Scheme 1975 and whose last day of service is on or after the 31 March 2017
AFPS 75 Commutation

Reserve service pension schemes

Guidance and documents relating to the reserve schemes.

Reserve Forces pension scheme 2005

Legislation

Legislation related to the Armed Forces Pension Scheme.

Gurkha Pension Scheme

Guidance and documents relating to the Gurkha pension scheme.

The Gurkha Pension Scheme: Your benefits explained (booklet) (PDF, 1.98MB, 40 pages)

Family Pension and ill-health benefit

Guidance and documents relating to family pension benefits and ill-health benefits.

Divorce

Pension sharing rules of the Armed Forces Pension schemes and Reserve Forces Pension schemes.

Armed forces pension arrangements pension sharing on divorce (February 2020) (PDF, 1.39MB, 134 pages)
Pension benefits on divorce and dissolution of civil partnerships (MMP 131) (PDF, 551KB, 42 pages)
Armed Forces Pension Scheme pension sharing on divorce factors (April 2019) (PDF, 900KB, 52 pages)
Pensions on divorce or dissolution of a civil partnership charging regime (PDF, 71.1KB, 8 pages)

Taxation

For those service personnel who receive a pension saving statement (PSS) letter you should refer to the following links. The first provides general taxation guidance first published in 2014 and whilst much of the information remains extant, it is being updated and will be re-published in October 2019, the second link is the guidance referred to in the PSS letter and is replicated below for ease.

Armed Forces Pension members guide to taxation of pension benefits (PDF, 646KB, 54 pages) (updated November 2020)
Step by step guide for AFPS Annual Allowance notification letter for tax year 2019/2020

Please also note that a new pension tax site has been launched through the MOD’s intranet site that provides further guidance and other useful information.

McCloud update

McCloud Consultation update (July 2020) (PDF, 76KB, 10 pages)
McCloud update and additional guidance (PDF, 46.7KB, 3 pages)

Armed Forces Payment Scheme - Adjustments to Pensions Due to Guaranteed Minimum Payment - November 2020

Guidance relating to adjustments to pensions

Armed Forces Pension Scheme - Adjustments to Pensions Due to Guaranteed Minimum Payment - November 2020 (PDF, 118KB, 2 pages)

Re-employment

Guidance and documents relating to re-employment.

Armed Forces and Reserve Pension Schemes (re-employment) (PDF, 287KB, 43 pages)

Transfers in and out of the schemes

If you have built up pension benefits elsewhere before joining the armed forces you have the option to transfer in the value of your other benefits to receive a service credit in your Armed Forces Pension Scheme.

Before you apply to DBS Veterans UK for a transfer in, you need to obtain details of the amount of your transfer value from your previous pension scheme, and then an estimate from DBS Veterans UK of the additional pension that this will buy. If you decide to go ahead with the transfer, you should make your application to DBS Veterans UK in writing.

You must be serving in the armed forces to be eligible to transfer in and once you have committed yourself to a transfer from your previous pension scheme, you cannot change your mind and you will have given up forever your rights and those of your dependants under the previous schemes.

Transfers into AFPS 15 must be completed within one year of joining the scheme. For members who remain solely in AFPS 75 and AFPS 05 who may still make transfers in from a non-public service scheme. AFSP 75 the transfer in must be made before your 54 birthday and in AFPS 05 the transfer in must be made before the beginning of your final year of service before your pension is due.

If you leave without receiving immediate pension benefits (including leaving with an Early Departure Payment (EDP) under AFPS 15 or AFPS 05) you have the option to transfer the value of your deferred pension benefits to other defined benefit schemes. A pension in payment cannot be transferred.

However, the government has prevented transfers from unfunded public service defined benefit schemes (such as the AFPS to funded defined contribution schemes in UK or abroad. The Pension Schemes Act 2015 and the Taxation of Pensions Act 2014 made this rule. Application for pension transfers should be made to:

DBS Veterans UK Pensions Division
Mail Point 480
Kentigern House
65 Brown Street
Glasgow
G2 8EX

Resettlement Grant

Resettlement Grants assist those leaving the regular armed forces to resettle into civilian life after completing a substantial period of service. A Resettlement Grant is not a pension.

It is a tax-free lump sum paid to regular service personnel, who, at the time they leave the services, are not eligible for Early Departure Payment benefits, an Immediate Pension or ill health award (or any other immediate pension benefits) and they meet Resettlement Grant qualification criteria, which are:

AFPS 2015 and AFPS 2005: all personnel need to have 12 years’ relevant service (from date of entry)
AFPS 1975: Officers to have at least 2 years’ Commissioned service and have 9 relevant years of reckonable service from age 21
AFPS 1975: other ranks to have 12 relevant years of reckonable service from age 18.

The value of the Resettlement Grant, effective from 1 April 2018 is:

AFPS 2005 and AFPS 2015: £11,101
AFPS 1975 for Officers £15,813 and other ranks £10,808

The Resettlement Grant is increased each year at the same rate as armed forces pensionable pay.

Only 1 resettlement grant is awarded, for those who have service in more than one scheme. If personnel are re-employed after leaving they may have to re-pay some or all of the grant. See the re-employment booklet for more details.

Armed Forces Pension Calculator

The Armed Forces Pension Calculator (AFPC) includes a projection of benefits from the Armed Forces Pension Schemes.

Governance Armed Forces Pension Board

The Pension Board is responsible for assisting the Secretary of State for Defence, as Scheme Manager, in ensuring compliance with the scheme regulations and other legislation relating to the governance and administration of the scheme and any statutory pension scheme that is connected with it.

Veterans UK forms

If you have been advised that you need to complete a form or view a detailed pension scheme guide, you can find these on the Veterans UK pensions forms page.