Ouch - the forces pensions society confirm your pension is frozen and lost forever
Discuss Ouch - the forces pensions society confirm your pension is frozen and lost forever in Armed Forces Pension Scheme on The Army Rumour Service; I posed this to the Forces Pensions Society on a different ARRSE link
Like many, I have already reached the max annual rate for my rank so I cannot be get any more annual ...
Like many, I have already reached the max annual rate for my rank so I cannot be get any more annual increments.
There are lots of others in this situation - all those who remain in a rank for 9 years + (eg passed over Majors & Lt Cols)
Consequently it appears from the FPS that our notional pension increases will be lost this year, next year and we will never recoup this freeze - read below.
As this freeze occurs at the stage when the % uplift most important (2% uplift of as 16 year Cpl pension is rather less than a Lt Col with 9+ years sen). It will cost those affected many thousands over the rest of their life, and that of their dependants.
FROM MY LINK
I understand that those who are in receipt of a Service Pension will have their increase applied at the CPI rather than RPI.
a. Will retired SP receive ANY increase in pensions this year & next if there is a freeze on Armed Forces pay in 2011 & 2012 ?
b. Will those still serving see any uplift of their pensions due to be drawn after retirement if there is a pay freeze in 2011 and 2012 ? For example, 2010 pension rates for a WO1 is 13590 & a tax free lump sum of three times that. If he was due to retire in late 2012 will the current rates still apply or will they be uplifted iaw CPI in 2011 & 2012 ?
This could be a very expensive loss for those approaching the end of long careers when annual increases are more significant on % terms.
Originally Posted by Forces Pension Society
a. For personnel still serving: AFPS 75 pension codes are worked out in relation to spot rates on pay scales for each rank. If there is no pay rise, I cannot see how the pension codes themselves can rise. However, you will have an extra year's service which will increase the pension payable (I am assuming that you remain in the same rank). AFPS 05 pensions are worked out on Final Pensionable Salary so, for those on top of their pay scale with no paid acting rank, accrued pension will rise to take account of the extra year's reckonable service. For those who have had a pay increment, acting rank or promotion, the pension will rise to take account of this too.
b. Once you leave with a pension, pension increases come in in the April following your retirement. They are in line with CPI, irrespective of whether there was a pay rise for serving personnel or not. For the first year the pension increase is proportionate - so if you leave at the beginning of the tax year you get the full uplift, if you leave half way through the tax year you get half the uplift, and so on. So, for someone who left on 10 April 2010, the uplift on the first Monday after the new tax year begins will be the full CPI of 3.1%.
The Forces Pension Society worked had to get a degree of protection in the design of AFPS 05 for exactly the problem you highlight. For AFPS 75 members, with inflation running ahead of pay rises, there is a pension trough, albeit shallow compared to the significant trough experienced in the 1970s.