Armed Forces Pension Scheme 2005 (AFPS 05)

The old Armed Forces Pension Scheme has been radically overhauled. However nothing so glamorous as the warrant for AFPS 75 prefixes the new scheme, which was introduced by the Secretary of State for Defence through the Armed Forces (Pension and Compensation) Act 2004 which came into force on 6 April 2005. Such is the march of progress.

All new recruits who have joined since April 2005 are on the new scheme automatically.

Serving sailors, soldiers and airmen had to select whether to join the new scheme or stay in the old one with an effective date of April 2006, It was a difficult decision as each scheme was better in some respects and worse in others, depending on individual circumstances, and it was almost impossible for most people to forecast where their career might have taken them when they eventually retired.

Everyone affected was supplied with information through the chain of command about the changes, so that they could make an informed decision by the deadline.

During the decision making period, the Society was very busy providing illustrative forecasts for its members and also for the many new members who had learned that the Society was able to provide such a service.

However, the Society's job did not end there! As good as it is, the new pension scheme will inevitably contain the odd anomaly and produce new groups of disadvantaged servicemen and women for us to help. This has already become evident.

The new scheme has the following main features:

  • Like its predecessor it is a defined benefit scheme (this means you know what pension what you will get regardless of the performance of the economy). This is a major benefit not found in many private sector schemes.
  • It is based on your best 365 days pay in the last 3 years of service.
  • It is based on all the time you have served (up to 40 years maximum).
  • Eligibility begins the moment you sign on at whatever age.
  • Widows' benefits are up to 62.5% of spouses' pension.
  • Death in service grant is 4 times salary.
  • The old immediate pension is replaced by an Early Departure Payment from the 18 years of service (or age 40) point for all ranks, which gives only a percentage of the full pension until age 65, when the full value is payable. But two lump sums are also payable one on exit and the second at 65.

In summary AFPS 05 favours a long service career, and has a much improved dependant's package.

AFPS 05 - Anomalies

The new scheme has been running for a very short time, and despite the huge amount of care and attention which went into its preparation, one or two anomalies are already appearing, and the Forces Pension Society will campaign for their resolution as they become manifest.