Continuation of service past 22 years and the pension.

Discussion in 'Finance, Property, Law' started by old_bloke, Aug 21, 2003.

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  1. Can anyone explain why it is disadvantageous to remain in the Army past 22 years regarding the pension? My C.O. has just been on a briefing in Germany and on his return spoke about this subject. Stating it was not worth staying in as you lose out on your pension? Any light to throw on this please? :roll:
     
  2. I am fairly certain this is wrong. Speak to your RAO staff for the true facts.
     
  3. May be he's just trying to get rid of you? :oops:
     
  4. Maybe it is due to the fact that once you continue beyond the 22 yr point, you are not collecting the pension due to you. This saves and enormous amount of money, whereas very little benifit is gained on your monthly pension upon your eventual release.... be aware your lump sum stays the same!
     
  5. I'm no expert, but I was looking at the pension rules on the internet (heres the links)
    Officers http://www.army.mod.uk/servingsoldier/condofserv/mm/pensions/ss_cos_mm_pay_pen_offrs_w.html
    Soldiers http://www.army.mod.uk/servingsoldier/condofserv/mm/pensions/ss_cos_mm_pay_pen_sldrs_w.html

    It seems to me that if you are a private/rsm/field marshall even if you stay for another 10 years your pension will not increase (unless you get promoted) as it is based on your final rank leaving the army. So you can work as much as you like you still won't get a penny more than if you left tomorrow.

    To experts on the board, am I right?
     
  6. Thanks wibble/D_B.

    OB
     
  7. Do not forget that the Other Ranks pension is based on a full career of 37 years pensionable service.

    Therefore your annual pension at the 22 year point will be 22/37ths of the maximum pension. So each years extra service will be add to your eventual Annual payment. Though with each extra year served over 22 years the amount that you are able to commute reduces. Swings and Roundabouts.

    For full information see your Pay Sgt.
     
  8. I suppose it's because of the simple fact that you are not drawing a source of income that depending on your circumstances could be worth 33% of what you are currently earning (less tax). You then have the opportunity to go and start again and earn another salary. There is also the aspect of commutation, a tax free lump sum (OK, I know it's yours), but depending on your circumstances, it's quite a benefit.

    I did 24 years man & boy. My advice is that if you think you can make a success of civilian life, then go for it, because the rewards can be gratifying. There is also the aspect of no more early morning PT (no more early morning anything really unless you want it to) - it has it's moments. I still miss it though. :(
     
  9. wibblefishbanana
    Maybe it is due to the fact that once you continue beyond the 22 yr point, you are not collecting the pension due to you. This saves and enormous amount of money, whereas very little benefit is gained on your monthly pension upon your eventual release.... be aware your lump sum stays the same!

    That is what I was led to believe when I was talking to a friend still in the service.
     
  10. As stated above under AFPS75 a full pension is based on 37 years service, so if you leave at 22 years you will only receive 22/37ths of a full pension. For every extra year served your pension will increase by about 1% up to a maximum of about 48% (something like that) of your final representative salary at 37 years.


    Under AFPS05 there are similar but different changes dependent on length of service. If you play around with the pension calculator you can see the differences. I used a WO2 - Level 9 - High Band on AFPS75 - Final Salary - £43252:

    22 Years:
    Pension: £12782
    Terminal Grant: £38346

    37 Years:
    Pension: £19473
    Terminal Grant: £58419

    Calculator: Armed Forces Benefits & Pension Calculator

    At the end of the day it is an individual’s decision based on personal circumstances.
     
  11. vauxhall

    vauxhall Sponsor

    In both schemes the pension increases with the length of service. The lump sum is three times the pension -ie. it is not frozen at the 22 yr rate. There are occasions when the lump sum is more (commutation) or less (inverse commutation) but the norm is 3x pension.

    There is a disadvantage to officers in AFPS 75 who serve beyond IP and leave before having served 29 yrs (I believe) in that the pension code for PVRs is less generous than that for compulsory retirement. After that point the pension codes come into line.

    I am afraid I don't know what the disadvantage to ORs is - I haven't heard of one.

    If you feel you need an expert eye cast over the problem, contact The Forces Pension Society.