So lets be clear on the pension and commutation issue raised in the thread http://www.arrse.co.uk/cpgn2/Forums/viewtopic/t=76631.html. According to the MOD booklet AFPS 75 - Your pension scheme explained dated MMP/106 re-issued Feb 07 which states The Finance Act 2004 (FA 2004) stipulates that a members pension may not reduce from one year to the next except in exceptional prescribed circumstances. Rights to commutation in respect of pension earned before 6 April 2006, when the provisions of FA 2004 came into force, are unchanged, you need to apply no later than 12 months after leaving the service but, for pension in respect of service after that date the commutation decision must be made before the pension comes into payment. To maximise the amount of resettlement commutation you can receive you need to apply before leaving the Services otherwise only service before 6 April 2006 can be commuted. The booklet makes no comment about the fact that the commutation rate has dropped from 50% to 25%. Furthermore, a comment in the FA 2004 seems to have been interpreted in such a way that instead of protecting employees rights it disadvantages employees rights. Furthemore by digging around a bit I came across an important note (aimed at the Navy but equally applicable to the Army) which says the following: BACKGROUND 1. Personnel leaving the Armed Forces before reaching the age of 55 with an entitlement to an Immediate Pension (IP), other than invaliding benefits, may apply for resettlement commutation. 2. The Finance Act 2004 (FA 2004) made changes to the rules regarding taxation of pensions, which had an implication for members of AFPS 75 who have service after 6 April 2006 in the following two areas: a. Anybody wishing to commute the element of service after 6 April 2006 must now make the decision to do so before leaving the Service. b. AFPS 75 capped the amount raised in a lump sum to 50% of the individuals total pensionable value. This is now reduced to 25% but only applies to any service accrued after 6 April 2006. In the overwhelming majority of cases, 25% of the value of the total pension exceeds, by far, the amount that can be raised by commutation. 3. Although the Finance Act was introduced into law in 2004, the changes highlighted above were not effective until 6 April 2006. Significantly, the guidance notes from HM Revenue & Customs (HMRC) to individual schemes, AFPS 75 included, were not made available until recently, thus prompting promulgation of the change via 2007DIN01-018. The Ministry of Defence has no flexibility in applying these regulations and must comply with HMRC rules. IMPACT OF CHANGE 4. For the overwhelming majority of personnel (including all ratings) this change does not have any impact at all on the amount of capital that can be raised by commutation, or the terms of recovery. However, those wishing to apply for resettlement commutation must now do so prior to leaving the Service. The decision to commute pension is a personal one but by doing so the individual should understand that this is potentially an expensive option as the amount of pension abatement to recover the commutation repayment can reduce the amount of annual pension received considerably; there may be more advantageous methods of raising capital than taking this option. It is recommended that advice be sought from an independent financial adviser prior to making any decision on commutation; the White Ensign Association are available to provide pension advice and assistance to all. Alternatively, information about independent financial advisers accredited by the Services Insurance and Investment Advisory Panel (SIIAP) is contained in DIN 2005DIN02-098. OFFER TO TRANSFER TO AFPS 05 5. This policy amendment occurred after the Offer to Transfer (OTT) exercise and as such the Personal Benefit Statements provided at the time were correct. Importantly, the lump sum possible under AFPS 75 is still, and always will be, greater than the EDP lump sum available under AFPS 05. It should be noted that the value of an individuals total pension package (pension + lump sum) is not altered in any way by this recent change and there will be no opportunity to re-visit original OTT decisions based on this adjustment. It would appear to me that a major change has been imposed upon the pensions of Military personnel without consultation, without full and frank explanation (could they have put something in our pay statements or written a letter?) and it is a change that could have significant impact upon the financial plans of thousands of people. Cheers mate. Dont the people at the top know that Loyalty is a 2-way street! Anyone care to make an offical comment from the MOD?