Pension question

Discussion in 'Armed Forces Pension Scheme' started by stackon, Aug 25, 2011.

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  1. Just made the decision to go before my 24 yr point and now leaving in Aug 13. Quick couple of questions for the enlightened.

    I've saved quite a bit of cash in my current post and not too sure if to take the full commutation and the reduced yearly pension, but, I will leave when I'm 46 so only 9 years to push until i reach the fabled 55. I've checked the pension calculator and seen if I take the full commutation I'll get an estimated £17k extra and my yearly is reduced by £2k.

    Does anyone know what, when I reach 55 my pension will go up from, is it the reduced yearly (if full commutation taken) or is it from what I would have been getting if full is not taken?

    Thanks in advance.
  2. Your pension will revert back to full amount and increase by the rate of the CPI x 9.

    e.g. 10000 a year before commutation - 8000 after.

    9 years of CPI on original 10000 (say 2.5%) = 2250

    So at 55, your pension will be 12250 and increase every year thereafter in line with current CPI.

    (Consumer Price Index)
  3. Thanks for this, very detailed and a great help. My mind is now made upto take the tax free lump sum as I'll only have 9 years to push until my 55th b'day.
  4. The Financial Aspects of Retirement briefing covers commutation and lots of other pensions and financial issues. It is free and lasts only one day. The first hour and a half is delivered by the Forces Pension Society and covers AFPS pensions (including commutation), tax, national insurance, state pensions and living abroad. The rest of the day is devoted to savings, investments,wills and money matters generally - including what to consider when deciding whether commutation is best for you. Booking is through your Resettlement Office and briefings take place in locations throughout the country.
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