FTRS - Veterans UK - the sting in the tail upon promotion

[Ninja_Stoker]

Just a heads-up following a recent ruling by "MOD Pensions Authority" in Whitehall (whoever they are), as advised by Veterans UK...seven months into a contract, signed ten months ago.

For those on FTRS contracts (FC, HC, LC & NCS) who CBA reading the ins and outs, the last paragraph summarises the fallout.

As all former Regular service personnel in receipt of an AFPS pension should already know, your combined FTRS net pay & pension cannot exceed your last Regular service net pay, at the rate of pay for your rank & pay increment upon discharge.

Upon increase of pay or pension, your combined income is abated (capped) by reducing your pension paid to bank.

A couple of years back I was promoted to the substantive rank of WO1 whilst serving on an FTRS contract. Upon contract renewal my pension was adjusted to reflect the increase in pay to ensure I did not receive less overall net income than previously.

In October of last year I signed a new FTRS contract which seamlessly ran from December. Veterans UK wrote in December to announce that because it was a new post (an SO3 billet) they had recalculated my pension abatement even though my pay remained unchanged. In short, the £12,000 a year pension abatement already deducted was increasing by £220 a month net to £14,640 a year.

The Forces Pension Society advised I wrote to challenge why the adjustment was not re-applied. Much time passed.

Veterans UK have finally admitted they have fcuked-up...

In summary, this means that in future, once the initial re-employment abatement is calculated...if you change rank, post or type of commitment there will be no adjustment for previous levels of income. In other words your combined net income can be reduced but not increased. Those promoted on FTRS will effectively be given the rank but not the pay upon contract renewal from now on in.

 

[Panic-in-Detroit]

Just a heads-up following a recent ruling by "MOD Pensions Authority" in Whitehall (whoever they are), as advised by Veterans UK...seven months into a contract, signed ten months ago.

For those on FTRS contracts (FC, HC, LC & NCS) who CBA reading the ins and outs, the last paragraph summarises the fallout.

As all former Regular service personnel in receipt of an AFPS pension should already know, your combined FTRS net pay & pension cannot exceed your last Regular service net pay, at the rate of pay for your rank & pay increment upon discharge.

Upon increase of pay or pension, your combined income is abated (capped) by reducing your pension paid to bank.

A couple of years back I was promoted to the substantive rank of WO1 whilst serving on an FTRS contract. Upon contract renewal my pension was adjusted to reflect the increase in pay to ensure I did not receive less overall net income than previously.

In October of last year I signed a new FTRS contract which seamlessly ran from December. Veterans UK wrote in December to announce that because it was a new post (an SO3 billet) they had recalculated my pension abatement even though my pay remained unchanged. In short, the £12,000 a year pension abatement already deducted was increasing by £220 a month net to £14,640 a year.

The Forces Pension Society advised I wrote to challenge why the adjustment was not re-applied. Much time passed.

Veterans UK have finally admitted they have fcuked-up...

In summary, this means that in future, once the initial re-employment abatement is calculated...if you change rank, post or type of commitment there will be no adjustment for previous levels of income. In other words your combined net income can be reduced but not increased. Those promoted on FTRS will effectively be given the rank but not the pay upon contract renewal from now on in.

I get what you are saying, but not sure what the point is. AFAIK, these have been the rules since 2015. These rules have always applied across the public sector, but the MOD was very late in catching up.

 

[Ninja_Stoker]

I get what you are saying, but not sure what the point is. AFAIK, these have been the rules since 2015. These rules have always applied across the public sector, but the MOD was very late in catching up.

The point is Veterans UK have been fcuking it up since before 2015 and any person on FTRS since then and subsequently promoted will have had their pension abatement incorrectly adjusted to reflect their promotion.

Examples that I can think of are Commissioned Officers & NCOs who left the regular service since 2003 were re-employed on FTRS contracts and promoted since the initial abatement calculation. There are 677 Naval personnel currently on FTRS contracts, I imagine there may well be a large number of Army personnel.

 

[Panic-in-Detroit]

The point is Veterans UK have been fcuking it up since before 2015 and any person on FTRS since then and subsequently promoted will have had their pension abatement incorrectly adjusted to reflect their promotion.

Examples that I can think of are Commissioned Officers & NCOs who left the regular service since 2003 were re-employed on FTRS contracts and promoted since the initial abatement calculation. There are 677 Naval personnel currently on FTRS contracts, I imagine there may well be a large number of Army personnel.

Ah, so they are not following the rules correctly?

 

[Ninja_Stoker]

Ah, so they are not following the rules correctly?

It seems so. They admit the error, state they will not be reclaiming "overpayments" retrospectively...BUT, it looks like anyone promoted on an FTRS contract may well have had their abatement wrongly calculated/adjusted and could well face a pay reduction imminently. Mine was £220 a month reduction in net income, anyone promoted more than once whilst on FTRS will likely face a significantly higher reduction.

 

[Ninja_Stoker]

It would be interesting to hear what @Forces Pension Society make of the Veterans UK announcement - they advise that the MoD Pensions Authority team have written to the Forces Pension Society about the Veterans UK error and presumably, the implications which are to follow.

 

[Forces Pension Society]

Am in the office on Monday so will find out who you dealt with and get the full picture.

 

[Ninja_Stoker]

Am in the office on Monday so will find out who you dealt with and get the full picture.

Many thanks. I suspect the revised statement by Veterans UK is indeed correct and appreciate the Forces Pension Society are snowers.

The issue at stake is the probability that there will be a fair few FTRS personnel who were promoted since leaving the regular service, in receipt of a pension, that may well be shortly in receipt of a letter declaring a significant reduction in net income.

I'll be submitting an FOI to Veterans UK to determine how many people are affected by the ruling, prior to requesting a parliamentary question regarding the error via my MP.

I'll be in contact with the Forces Pension Society through conventional channels in due course, but happy to pm scanned letters in the interim.

It took best part of a year to get this far as I suspected Veterans UK had placed it firmly in the "too difficult" tray, when pressed.

 

[stacker1]

As all former Regular service personnel in receipt of an AFPS pension should already know, your combined FTRS net pay & pension cannot exceed your last Regular service net pay, at the rate of pay for your rank & pay increment upon discharge.

@Forces Pension Society any idea why this rule/law is in place?

 

[Panic-in-Detroit]

@Forces Pension Society any idea why this rule/law is in place?

This rule has always been in place for public sector pensions. Otherwise, someone could "retire" on full pension one day, and the next day be reappointed on the same pay. i.e. they would be in receipt of a pension, but not retired. The MOD took a long time to catch up on this. The previous NRPS contracts had TOS that were exclusive and have been phased out. No other employer would pay a full time salary plus full pension to the same employee. Obviously if someone in receipt of a pension takes a full time job with a different employer, their pension is unaffected.

 

[Panic-in-Detroit]

Individuals manage to get round this in other public sector organisations, by returning to work part time. If they work less than half the contracted hours, the pension is not reduced. FTRS posts are mainly full time, so that option is not available.

 

[stacker1]

This rule has always been in place for public sector pensions. Otherwise, someone could "retire" on full pension one day, and the next day be reappointed on the same pay. i.e. they would be in receipt of a pension, but not retired. The MOD took a long time to catch up on this. The previous NRPS contracts had TOS that were exclusive and have been phased out. No other employer would pay a full time salary plus full pension to the same employee. Obviously if someone in receipt of a pension takes a full time job with a different employer, their pension is unaffected.

First bold. What difference does it make? That individual has "earned" the pension and is now getting paid for a task by the firm. (If someone without a pension did that task the firm would pay them the proper amount).

Second bold.
I dont see why not. If a employer wants a task to be done, it probably wont care what the new employee has earnt from them before.

Basically its sounds like a bit of a con, where the state is cashing in.

 

[Panic-in-Detroit]

First bold. What difference does it make? That individual has "earned" the pension and is now getting paid for a task by the firm. (If someone without a pension did that task the firm would pay them the proper amount).

Second bold.
I dont see why not. If a employer wants a task to be done, it probably wont care what the new employee has earnt from them before.

Basically its sounds like a bit of a con, where the state is cashing in.

You are missing the point. A pension is surrounded by all sorts of rules and regulations, and can only be paid to someone who is retiring from the service of their employer. If they return to work with the same employer, technically, the pension rules have been broken.

 

[Forces Pension Society]

@Forces Pension Society any idea why this rule/law is in place?

It is all about 'fair and open competition' . Where the new employment is available by virtue of previous military service (as with FTRS) the abatement rules kick in. The story goes (and I cannot confirm the veracity of it) that NRPS got round it as the had a couple of mechanics who were recruited without previous military service.

 

[stacker1]

You are missing the point. A pension is surrounded by all sorts of rules and regulations, and can only be paid to someone who is retiring from the service of their employer. If they return to work with the same employer, technically, the pension rules have been broken.

Whats stopping the rules being changed? Ive googled it for private employers and they can get around it with part time or contract work. There doesn't seem to be a point to the rule. Taxes will still be paid on the combined wages and pensions.
Is this an old rule that nobody has bothered to update?

 

[Panic-in-Detroit]

Whats stopping the rules being changed? Ive googled it for private employers and they can get around it with part time or contract work. There doesn't seem to be a point to the rule. Taxes will still be paid on the combined wages and pensions.
Is this an old rule that nobody has bothered to update?

It is a public sector pension issue. Private pensions are different beasts.

 

[stacker1]

It is a public sector pension issue. Private pensions are different beasts.

I asking why though, what is the point of it? If someone is paid to do a job, his previous pension shouldnt matter.

According to this, some firms may have rule against having a pension and working for the same company

Will working part-time after retirement affect my pension payments?

I took voluntary redundancy in February 2017. I’m bored and want to work part time. How many hours am I entitled to work without it affecting my monthly pension payment?

www.thisismoney.co.uk

As its a rule and not a law, why not change it?

 

[Panic-in-Detroit]

It is all about 'fair and open competition' . Where the new employment is available by virtue of previous military service (as with FTRS) the abatement rules kick in. The story goes (and I cannot confirm the veracity of it) that NRPS got round it as the had a couple of mechanics who were recruited without previous military service.

That is not true. Historically, members of the Armed Forces had many rules that were totally at variance with both logic and reasonability. e.g. NRPS previously could claim tax free daily expenses to work each day, despite them applying for a job in fixed location, and having the freedom to choose where to live. HMRC have gradually caught up with these anomalies.

 

[smallbrownprivates]

Time was when you could do part time contract or interim professional work as an ex officer/RO through someone like SCS and be in receipt of your pension.
There was all sorts of squeaking about how many contractors were filling in jobs, they switched to an FTRS model, maybe saved money, but started drawing on a much smaller pool.
FTRS is not a match for everyone's circumstances and (as above) has financial penalties

 

[Ninja_Stoker]

Pension abatement has always been a vexed issue. Basically the rules state that if your prior military service is required for re-employment in a public sector role, then you forfeit the additional income (despite the fact the supposedly non-contributary pension accrued, has already been earned).

There are many, many anomalies. Former Naval Personnel who join the Royal Fleet Auxiliary by dint of their service acquired experience and qualifications are not subject to abatement, likewise those joining the Civil Service in a position based on their prior military knowledge, qualifications or experience. Admiral Lord West, appointed as Counter Terrorist & Security Minister by dint of his previous employment and experience, also received full pay and 'pension'.

In this case however, the issue isn't abatement, it's about a reduction in income despite promotion.