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Commutation calculations.

Bit of a random question I know.

On the Pension Calculator I have two values for my immediate pension. One for AFPS 75 and one for AFPS 15.

Later on there is a value, listed as AFPS 75, for the reduced immediate pension should I go for maximum commutation.

Just working out the sums now, but I assume I still get the full AFPS 15 amount listed regardless of commutation?

Also what is this inverse commutation?

What are the road shows like the AFPS provide? Are they useful to those in the dusk of their careers? Problem is I've not met anyone who's been to one... but if they're on the way out it is unlikely that I would I suppose.
 
@Tired_Tech,
I believe Inverse Commutation is only applicable to AFPS 05.

See screen shot from JSP 764. Armed Forces Pension Scheme 2005 (JSP 764) - GOV.UK

upload_2017-7-7_11-48-22.png
 

Forces Pension Society

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Bit of a random question I know.

On the Pension Calculator I have two values for my immediate pension. One for AFPS 75 and one for AFPS 15.

Later on there is a value, listed as AFPS 75, for the reduced immediate pension should I go for maximum commutation.

Just working out the sums now, but I assume I still get the full AFPS 15 amount listed regardless of commutation?

Also what is this inverse commutation?

What are the road shows like the AFPS provide? Are they useful to those in the dusk of their careers? Problem is I've not met anyone who's been to one... but if they're on the way out it is unlikely that I would I suppose.

First, here is an article on the decisions you have to make:

Pathfinder International magazine

Commutation is giving up income to generate a lump sum - which will reduce you income tax bill. Inverse commutation is giving up a lump sum to improve income - which, of course, increases your total taxable income.

Next, separate the two schemes in your mind.

You are right that AFPS 75 offers and automatic lump sum of three times the pension (no decision there) and the option to buy a second lump sum and pay for it from your pension before tax until you are 55. At 55 your pension goes back to its original level and increases by the CPI rises which have occurred since you left the Service.

You did not mention whether you are getting an AFPS 15 EDP but I would imagine you are. The EDP lump sum (tax free) is 2.25 times the pension and you have the option to give it up to improve your taxable EDP income. Your decision on AFPS 75 Commutation and this decision (on inverse commutation) are separate and have no impact on each other as far as the schemes are concerned.

AFPS 15 does not feature an automatic lump sum but it allows you to give up pension in order to generate one. Although they are asking you what you want to do now, the lump sum will not materialise until your state pension age (although you can claim as early as age 55 with actuarial reduction).

Get in touch with your Resettlement Office. There is a programme of financial briefings and the first 2 hours of the day is all about your pension entitlement(s). The Forces Pension Society delivers this section of the briefing and people tell us that it is very valuable.

Finally, for those of you reading this who have protected AFPS 05 benefits, the post from shiny_arrse is spot on for AFPS 05.
 
Cheers FPS,

Booked in for a financial briefing, with the good frau.

What do the FPS provide in this respect? Looking in to them as most people seemto suggest joining them, if only for the the final year.
 

Forces Pension Society

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Our briefing is about 2hrs long.

We start with what each scheme offers the member by way of pension and EDP, including how the benefits work for those who were transferred to AFps 15. We cover how and when benefits are paid and by whom, including how pension increases work. We cover commutation and inverse commutation. Then we are on to tax, national insurance, living abroad and the old age pension. We also cover what happens if you die, including pension guarantees.

The Society itself answers members' questions and helps them challenge Glasgow when errors occur. We also campaign when we believe there has been an injustice. The underpayment of pensions to late entry officers who do not serve 5 years as an officer is an example of the former: the policy change regarding widow(er)s pensions on remarriage or cohabitation (they used to lose their pension - they don't now) is an example of the latter.

Our members get Pennant magazine twice a year, newsletters about bimonthly and we have various companies offering excellent deals for FPs members. Visit www.forcespensionsociety.org for further info.
 
Thought I’d reuse this thread as it’s a close fit.

This is probably directed at @Forces Pension Society. I’ve been looking at the situation regarding McCloud and my pension. I have 18.75 years AFPS75 and 3.5 years AFPS15. I think I can roughly calculate the effect on the pension and pension lump sum of moving over entirely to AFPS75.

I’m trying to work out if there is an effect on Resettlement Commutation. My reading of an article on the society website is that RC is calculated as the difference between a 22 year pension lump sum for a given rank and a 37 year pension lump sum. I am therefore taking it that the RC lump sum will not change based on moving from 18.75 years AFPS75 to 22 years.

Does anyone know if this is a correct assumption.
 
There would be no change to the amount you could commute under RC rules. The maximum is the difference between the lump sum you would have got if all your service was in AFPS 75 and the maximum lump sum for your rank.
Beautiful. Thanks for the swift response. That means if I go over to full AFPS75 they definitely owe me dosh. Happy days!
 
Yep. I’ve made a rough and ready calculation of those. I reckon the increase in AFPS75 pension is more than the loss of EDP over the time period. I reckon the resulting increase in AFPS75 lump sum is less than the loss of AFPS15 lump sum but covered by the increase in pension. Then as discussed the RC lump sum is the same. So overall they owe me and the longer it takes to sort the more they owe. Plus I get more pension between now and SPA. Win win!
 

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