AFPS 75 vs 15 in Numbers

[Deleted 9371]

I thought I would have a look at the difference between the two pensions using some real numbers in the pension calculator.

My example soldier was loosely based around my own career and promotion dates. Basically the soldier would join at 18 and leave at 22 years at the rank of WO2 with a final pensionable salary of £44,315 (higher band).

I did two calculations, the first is the soldier having joined 22 years ago and leaving now and the second joining now and leaving in 22 years. The good thing about the pension calculator is that it uses today's figures and doesn't try to take inflation into account, this means we can compare the two sets of results directly. The second soldier in this example has 212 days under AFPS 05 but this shouldn't effect the results too much.

AFPS 75
Immediate pension £13,096 (index linked at 55)
Terminal grant £39,288

AFPS 15
Pension/Early Departure Payment at exit £5,792
Lump sum at exit £38,149
EDP at 55 £5,874 (index linked)
Deferred pension at 65 £5,966 (index linked)
Lump sum at 65 £1,104
Deferred pension at state pension age (68 £16,832 (index linked)

So basically the lump sum isn't very different but essentially you get half the pension between leaving at 68. VEng Long is currently 24 years so guys could be looking at 26 years of the pension being halved.

 

[dingerr]

I did a similar thing for the 05 pension which also showed you were better of with afps 75.

Can't you top the 15 pension up though? If true then that's a big advantage.

 

[MacUK]

Who do you speak to, to start paying more into your pension ?

 

[Flying Felix]

I thought I would have a look at the difference between the two pensions using some real numbers in the pension calculator.

My example soldier was loosely based around my own career and promotion dates. Basically the soldier would join at 18 and leave at 22 years at the rank of WO2 with a final pensionable salary of £44,315 (higher band).

I did two calculations, the first is the soldier having joined 22 years ago and leaving now and the second joining now and leaving in 22 years. The good thing about the pension calculator is that it uses today's figures and doesn't try to take inflation into account, this means we can compare the two sets of results directly. The second soldier in this example has 212 days under AFPS 05 but this shouldn't effect the results too much.

AFPS 75
Immediate pension £13,096 (index linked at 55)
Terminal grant £39,288

AFPS 15
Pension/Early Departure Payment at exit £5,792
Lump sum at exit £38,149
EDP at 55 £5,874 (index linked)
Deferred pension at 65 £5,966 (index linked)
Lump sum at 65 £1,104
Deferred pension at state pension age (68 £16,832 (index linked)

So basically the lump sum isn't very different but essentially you get half the pension between leaving at 68. VEng Long is currently 24 years so guys could be looking at 26 years of the pension being halved.

Which makes complete sense because 75 is a final salary pension and 15 an average salary pension, so 1/2 of the final salary..

 

[stacker1]

So by paying an extra £16,500 (at today's rate) he would get an extra £190,000 by age 68 (at today's rate).

You'd be mad not to!

I've just used a compound interest calculator and 16500 (invested as a lump sum) at a generous 5% a year for 40 years is 121K.
Are you sure you got your sums right, the whole idea of the new pension is to pay out less.

 

[MacUK]

My pension is a mix between 05 and 15 does this effect my pension much ?

 

[Forces Pension Society]

Those of you who are Forces Pension Society members just need to ask David Marsh or Anthony Henderson to do the figures for you. They will set them out in a clear, comprehensible manner and are happy to answer supplementary questions.

Visit www.forcespensionsociety.co.uk

 

[stacker1]

You can't do a compound interest calculation on the £16,500 because it takes 22 years to even pay that in. In the first year you'd have only paid in £381.

I did some calculations that showed with 5% the return after 22 years would be £28,000.

I used the 16500 (as a lump sum) as a very generous example, the same as getting 5% a year (not bloody likely) and yet the figures appear to be nowhere near the 160k said would be returned. If I had used the first years figures and added to it every year AND used a more realistic percentage figure it would have been far lower than the 120k figure that I had worked out, so I cant see the government stumping up a hell of a lot more money than a squaddie would pay in.

 

[Forces Pension Society]

The video is right. AFPS 15 does not have provision for added years but it does have provision for buying added pension. Apologies to those who have read my previous post on this but added years is an expensive provision as you take out a contract which will give you X number of years extra reckonable service at what ever your rank is when you leave (AFPS 75) or at your final salary (AFPS 05). There is no way to control the costs particularly if the member is a high flyer. Added pension is cheaper for the exchequer as a cost is calculated for buying a certain sum.