Discussion in 'Armed Forces Pension Scheme' started by lunchy_bunsworth, May 9, 2005.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. I read that the MOD might be considering giving a one off lump sum for certain pension groups in the AF with no further pension payments to them.
    Anyone know anything about it or is the paperwork on the nurses bus?
  2. Get your paymaster to run comparitive figures on the benefits of both systems.

    I posted on this subject on another thread today. The average life expectancy after retirement is not great (fukc knows why) in which case the biggest lump sum possible would be a benefit however be careful. What may appear a huge lump sum may actually be considerably less than that you could receive over a 20-30 year pension period.

    Don't think of it as the Govt/Army doing you a favour. Any changes are usually driven by the desire to save money, ei your money.
  3. BN,

    Thanks, it was your comment that started me thinking. Do I understand you correctly? I am aware of the commutation of a large portion of the pension into one big lump sum but still having to retain a small monthly pension. What I understood from you was that the MOD would now sanction one massive lump sum as a one off with no monthly pension. Is this the case?

    Done the various options for pension before but not heard of this one.
  4. It is unlikely to be a physical lump sum, but a credit to a pension scheme of your choice. This would absolve the MoD of any responsibility for paying an index-linked person.

    For one person to buy the benefits currently on offer, it would cost around £500K. I bet that much won't be on offer if the scheme leaves the ground!
  5. Lunchy I'm way out of date and my retirement experience was in the mid 90's so much has probably changed.

    My advice is that you really need to sit down and work out your needs in the short and long term.

    In the short term if you need to supliment your savings to get started in civvy street with a view to housing, gap in finding a job, investing etc then you will need a lump sum of some size.

    The long term is the challenge. How long do you reckon you are going to live? Who the fukc knows but it is still worth planning out your retirement. The MOD pension is still a pretty good one, certainly where I live so it is worth getting your pension plan right.

    P.S. Never transfer out of the MOD pension into another. And don't forget; when you get out start up a new civvy pension plan which you should contribute to until retirement.
  6. BN'

    Sounds Like good advcie no matter how dated it might be.
  7. I think this is a case of one from the rumour mill. There is no option to take your whole pension as one big lump, either under the new 05 scheme or the old 75 scheme. The only time a pension can be moved as a lump sum is if it is transferred from one scheme to another. But there is no way an individual can receive this value and it is paid into the new scheme.

    Commutation is the only thing that allows you to take a bigger lump sum, but you still have to retain an annual pension of at least the value of the award. You will probably be familiar with Resettlement Commutation under the 75 scheme (maximum career lump sum in exchange for smaller pension) but this does not comply with Inland Revenue rules and 'Inverse Commutation' is part of the new scheme. This is a smaller lump sum for a bigger annual pension.

    Hope this clears it up.
  8. nosweat,

    Thanks for the above. My guess is that it wa a sh!t house rumour.
  9. i had the new pension brief last month,and under no circumstances would i take the new pension scheme.There is no mention whast so ever about a lump sum,just a lot less money all around if you take the new one,the packs with information are supposed to be out this month,and that is your time to make up your mind,hope this has helped slightly
  10. The rumour was banded around a few years back. It centered around you getting the complete value of the pension, from when you leave up to the age of 55. I asked a few people in the know, RAO etc, and he said whether its true or not, it would be illegal under pensions law (not sure of the truth of that), you would also be taxed on the complete sum, which would take a massive wedge of the payment, especially at super tax rates.

    Like you said, probably just a sh1t house rumour.

  11. Just remember, if it was financially beneficial to you and not them, they would not be considering it.
  12. Just remember, if it was financially beneficial to you and not them, they would not be considering it.
  13. I m guessing this current thread applies only to serving members coming up for retirement...but...does anyone know if this "lump sum" applies to members who have left (in my case 2000) and have moved overseas (in my case Australia)

    I spoke to an ex crab over here and he reckons he got a lump sum pay out (he did 9 years)
  14. A couple of interesting points.

    Firstly, what mens-meze said about the new scheme. It may well be that there is nothing in it for you, but other people will probably see things in it that will make them want to transfer to it. The packs should be out about July/August time, and as you said, that is the time to read the information given, take any independant financial advice necessary and make an informed decision.

    The second point is that boney_m is correct about the legislation. The bloodsuckers (Inland Revenue) want to limit the amount of pension being taken as a lump sum (tax free) and to increase the amount of (taxable) annual pension being received. So, hence why Commutation as most of you know it (bigger tax free lump sum in exchange for a percentage of annual taxable pension) is not part of the new AFPS.
  15. Pensions service or war is my cup of tea!

    What people might be getting confused is some of the many changes coming in over the next couple of years

    like for example maximum fund size you can earn in a life time

    unless your in some jobs that tony blair has said is exempt (law)

    the other is "The right to take all your pensions as a lump sum, as long as the total fund size is less than 15k"

    the other main one is the right to take some of an AVC or FSAVC as a lump sum and not as pension

    like all pension changes, they will affect everyone in a different way

    depending on you age the age of your wife/partner and how good is your health and even then its a gamble