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.
Your pension can be paid from age 55. It is also possible to access benefits earlier via the payment of an early departure payment (EDP) if you have at least 18 years of service and have reached age 40.
Pensions and EDP income count as 'earned income' – they are normally taxable but National Insurance Contributions (NICs) are not due in respect of them.
AFPS 75 provides an automatic tax free pension lump sum of three times the pension. AFPS 05 provides an automatic tax free pension lump sum of three times the pension. It is open to the member to give up some or all of the tax free lump sum in order to improve their taxable pension. This is called inverse commutation.
At age 55 the EDP income rises to 75% of the value of the preserved AFPS 05 pension and increases by CPI. It continues until the member is 65. If you are in line for EDP benefits, the higher percentages offered by the AFPS 05 EDP scheme could tempt you to choose to have your service counted in AFPS 05.
Current rates are 14½% for Regulars, FTRS (FC), and mobilised Volunteer Reserves, 5% for Part Time Volunteer Reserves and FTRS (LC), and 0% for FTRS (HC) pre-career pay rates.
If you're receiving a foreign military pension and you're an Australian resident for tax purposes, you need to declare your worldwide income each financial year, but not the amount you received prior to arriving here.
The tax-free lump sum is £26,992.92. The most they can commute is the difference between the 22 year lump sum for a Sergeant (£34,932) and the lump sum for a Sergeant with 37 years service (£53,220) – so £18,288.
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.
At age 55 the income is increased to 75% of the value of the preserved pension and CPI increases are applied. The EDP income continues until age 65. Because the pension and EDP come from separate schemes and individual is permitted to draw his pension early and have it paid at the same time as his EDP.
How is Your Pension Calculated? 6.1 Your benefits are based on your final rank and length of reckonable service. In AFPS 75, members of the Armed Forces with the same rank and same number of years of reckonable service are normally awarded the same pension, regardless of their actual pay.
Career path and progression
When you join the army, you sign up for 4 years. You can leave at any time after this as long as you give 12 months' notice. If you want to stay you can extend your 4-year contract. With training and experience you could move up through the ranks or into a specialist unit like the commandos.
However the pension is only assessed against LTA at the point it comes into payment. This is known as a Benefit Crystallisation Event (BCE). Therefore you will not be assessed for a breach of LTA until you retire and your pension comes into payment.
Is my ex-Spouse still entitled to claim a share of my military pension after divorce? In short, the answer is yes. Many people mistakenly believe that once they are divorced, the financial ties between them and their spouse are severed.
The Ministry of Defence (MOD) defines a veteran as: “anyone who has served for at least one day in Her Majesty's Armed Forces (Regular or Reserve), or Merchant Mariners who have seen duty on legally defined military operations.” Under the definition, veterans have already left the Armed Forces.
A compensation scheme for veterans for any injury or illness which has been caused by or made worse by their service in His Majesty's Armed Forces.
Even if you're living abroad, you're entitled to claim it. Regardless of where you're living in the world, when you reach your State Pension age (SPA), you're entitled to take whatever State Pension you've accrued.
If you move overseas, your UK pension will remain in place and be paid as normal. The amount of tax you pay on your UK pension may vary if you reside outside the EEA. It is recommended to get advice from an expert or HMRC to comprehend the consequences of relocating overseas on your pension payments.
If an eligible member completes 15 years of continuous eligible service in the Permanent Forces, the member may be eligible to receive the benefit. An eligible member must elect to accept the benefit, within 90 days before becoming eligible to receive the benefit.
Recruits (in initial training); £16,844 a year. Private: £21,425 a year. Lance Corporal: £28,351 a year. Corporal: £33,065 a year.
Under this plan, someone who retires at 20 years will receive 50% of their base salary as a pension, but each additional year they stay in, they will receive a multiplier of 2.5% more toward their retirement. That means if someone makes it to 40 years, they'll receive their full base salary as a pension.