Pensions- something is going on...


What is going on with the pension at the moment- I have heard about the introduction of the Army stakeholder, and I have read an article in the Times about modifying the current pension. Nobody I have spoke to seems to know what is going on, but there is a distinct sense of unease.

Is the Govt going to try fist us? The pension seems like a good place to start if you want to save some money on the budget.


War Hero
Kit Reviewer
Book Reviewer
The army was forced to provide a stakeholder pension- otherwise it would have been in breach of European law. It should be noted however that the stakeholder option is only available if your annual income is below £30,000 (give or take a few £s).

You can almost guarantee that army pensions will be an easy target for New Labour to target. They won't realise the mistake they will have made until far too many people have left and suddenly they find they can't meet our global policing commitments...
In general, anyone can open a stakeholder pension, regardless of salary.  But the MOD scheme may have different restrictions if they are contributing.

If you want me to confirm, let me know.


War Hero
I did read a paper which I downloaded from the net, but of course, as it is useful, it is not on the Army Web Site anymore :p :p

From what my small brain cells could manage, it did go on about lump sums, the removal of commutation (which appaerantly breaks some tax rule, however the service pension is exempt) and a few others.

Basically it was clearly a cost cutter and said that no civvy company has it.  I will try to find it and then put it up for download if the ARRSE bosses approve.

OK - I think I have got to the bottom of this....

The MoD is currently working on the 'new' Armed Forces Pension Scheme and have recently been lambasted by the House of Commons Select Committee on Defence over their progress. The MoD is yet to respond to this.

The Forces Pension Society says: "The one-off lump sum isn't something of which we were aware and sounds like a good piece of pure speculation!"

If you want to know the latest position on the new pension, try the MoD website
It should tell you all you would ever want to know!


War Hero
Dear F_S,

What do you think of this scheme?  

Have not had a chance to look yet I'm afraid.  I will have a dig around.  I am particularly interested in finding out what the Defence Select Committee said to them about it (which will save us all the hassle of having to read the MoD propaganda plus provide some entertainment!).  

However, Select Comm minutes are not published so we may be unlucky there.  I shall come back to you.



???Please, please, please can somebody give us all a clear answer on this.  I get out in Jul 03 and am a bit concerned that all I have learned so far ref pensions might be a load of arse.  What do I believe? ??? :'(

Please see my earlir essaes on this thread.  This is the definitive position according to the Forces' Pension Society.  There is unlikely to be any news or changes to the pension in the immediate future as the legislation has stalled (see the MoD link on previous message for details of the proposals).  Rumours of a lump sum are indeed just rumours.

Hope this helps.  You might want to contact the Forces' Pension Society direct if you have more detailed questions. Or I can get in touch for you.




Many thanks for your time and effort.  Checked out the link but will study it in greater detail over time. ;)

Let's hope this IS the definitive answer!!

Press Notice No. 20  of Session 2001-02, dated 9 May 2002
Third Report from the Defence Committee

The Third Report from the Defence Committee in Session 2001-02, Ministry of Defence Reviews of Armed Forces' Pension and Compensation Arrangements is published today as House of Commons Paper 666. In the Summary to the Report the Committee sets out its views as follows–

The existing schemes
The Armed Forces Pension Scheme (AFPS) is an occupational pension scheme provided by the Ministry of Defence (MoD) for members of the Armed Forces. In addition to retirement pensions, it provides benefits for those who suffer injuries, illness or death, both as a direct result of military service (attributable benefits), and from other causes (non-attributable benefits).

The AFPS is unusual in that it provides a pension (the immediate pension) at an early age (38 for officers and 40 for other ranks). Its purpose is to encourage personnel to remain in the Services long enough to reach the immediate pension point, and thus improve retention; and to compensate them for a short career and for the lower salary that many will earn on leaving the Services.

The AFPS is a non-contributory scheme. However, the Armed Forces Pay Review Body takes account of the value of the pension scheme in making its recommendations on Service pay levels. Pay is abated to reflect the relative value of Armed Forces pensions compared with other schemes; the current abatement figure is seven per cent.

A separate scheme operates to provide compensation for Service personnel injured or killed during their military service, in the form of the War Pensions Scheme. This provides a tax-free war pension with rates based on the degree of disability. Widow(er)s' pensions are paid to the spouses of those who are killed in military service, or who die later as a result of injuries sustained.

Service personnel injured as a result of a criminal assault may claim from the Criminal Injuries Compensation schemes, but these schemes do not cover injury or death arising from "warlike activities". Personnel who believe their injuries or illness arise from negligence on the part of the MoD are also able to make a claim for compensation in the civil courts.

The review process
The MoD embarked on reviews of both the Armed Forces Pension Scheme and compensation arrangements in 1998 with the aim of introducing new schemes which were modern, fair and simpler; which targeted benefits at the most disabled; and which provided an alternative to suing the MoD for negligence in court. Separate consultation documents on pension and compensation arrangements were published in March 2001.

The review process, however, has been dogged by delay and incompetence. The consultation documents were weak and uninformative. It is only in response to our own long list of questions that the detailed information needed to assess the new proposals has emerged from the MoD and been put in the public domain. Overall the MoD appears to be little further advanced in its thinking now than it was when the reviews began. Both proposed schemes are at best inadequately thought-through and at worst fundamentally flawed.

The pension review was hamstrung from the outset by the MoD's decision to require any new scheme to be cost neutral in effect. The result is that it proposes improving ill health and dependants' benefits by reducing the pensions of other Service personnel. This is unacceptable.

The MoD also decided not to examine or cost alternatives to immediate pensions. Immediate pensions are an expensive part of the AFPS, but their principal purpose is as a manning tool to assist retention and recruitment. We believe that it was wrong to let manning considerations stand in the way of a properly thorough review of Armed Forces pensions.

The Armed Forces deserve a pension scheme which recognises the unique commitment they make to this country and which compares favourably with what is available to other public service employees. The MoD needs to do a great deal more work on its proposals before they meet this requirement, taking best practice as its starting point, rather than cost-neutrality.

The compensation review proposed a completely new system: a lump sum payment for pain and suffering based on a tariff of awards; and a further payment for loss of earnings, calculated as a lump sum but paid in instalments as a guaranteed income stream. The scheme provides for all injuries and illness resulting from military service, and includes dependants= benefits for those killed in service. But it also introduces a limit on the period for making claims of three years after the incident giving rise to the injury occurs. Furthermore claimants would in future have to prove on the >balance of probabilities' that the injury directly resulted from military service (currently there has only to be a reasonable possibility of a causal link).

The compensation proposals are seriously flawed. The MoD's aim was a simpler, quicker system, but they have not convinced us that their proposals will produce this. Moreover, fairness and justice should not be sacrificed for simplicity. As a result of the way the new scheme has been designed, fewer claims will be successful, as the MoD has admitted. In the absence of any evidence of over-provision or abuse at present, we regard this as unjustified. We do not believe the scheme proposed does justice to Armed Forces personnel and we cannot support it in its present form.

Unmarried partners
Neither review initially addressed the issue of benefits for unmarried partners, although this is now being examined as part of the MoD=s further work. We expect to see appropriate provision included in any new schemes.

The full text of the Report is available on the Defence Committee website at:
This is now closed but it may help as an outline of their proposals at the time.
Armed Forces Pensions and Compensation: Consultation on proposals for change
Why should I read this?

The Armed Forces Pension Scheme and the arrangements for compensating Service personnel or their dependants if they are injured, become ill or are killed as a result of their service are under review. The review team want to know what you think about their ideas.

What do the current arrangements offer me?


A pension and gratuity when you are aged 60 or earlier if you stay in the Services for at least 22 years or at the normal retirement age of 55 (other ranks) or 16 years (officers), based on representative rates of pay.
A pension for your spouse if you die before him or her.
Benefits for your spouse and children should you die whilst still serving.
Ill-health benefits based on the number of years you have served should you be invalided out of the Service.

Additional benefits and War Pension Benefits for you or your dependants should your invaliding or death be due to your service.
I'm told you get a good deal with the current arrangements. Why change?

The current arrangements compare favourably with arrangements for employees elsewhere. But the arrangements have been in existence for many years, and we need to ensure that they still meet the particular needs of the Armed Forces in the 21st Century.

So what is proposed on pensions?

The same pension structure for officers and other ranks.
Pensions no longer based on representative pay for each rank. Instead pensions based on actual basic pay, perhaps the best twelve-month period in the last three years of service. This is not only fairer by linking pensions directly to payrank, but makes it easier for members to work out what they are entitled to. All pensions wouldl continue to be fully index-linked to protect them against inflation.
Immediate pensions both for officers and other ranks payable from age 40 or after 18 years' service, whichever is later, but possibly with an option to choose instead a bonus payment, or payments, and a later pension.
Restructured invaliding benefits to reflect employment prospects in civilian life.
Improved benefits for dependants.
In due course, everyone will have the choice to stay in the current scheme or to transfer to the proposed new pension scheme. At that time, you will be given further information to help you make your decision.

And what about compensation?

The current compensation arrangements are complicated and confusing, with different rules in the Armed Forces and War Pensions Schemes. The benefits do not recognise adequately the needs of those who are seriously disabled, and compensation is not available for those remaining in the Services following illness or injury due to service.

The review recommends that benefits might be provided in two forms:

Compensation for the injury or illness itself, paid as a lump sum in accordance with a tariff according to disablement; and
Compensation for lost earnings capacity, paid as an income stream, providing regular payments for life.
Compensation would be paid to those who are injured but stay in Service.

The compensation arrangements would apply to all incidents giving rise to illness, injury or death resulting from incidents due to service after the start date for the new compensation scheme.

What do you want me to do now?

We have published detailed consultation documents. These have been sent to every unit within the Armed Forces unit as well as to other interested parties. The consultation documents spell out the proposals in greater detail than can be included here. Your admin office may be able to give you access to a copy or you can access it via CHOTS or the Internet. You are invited to comment on the proposals - we want to know what you think about them.
There may be the opportunity to take part in local discussion groups on these proposals - please try to attend one of these and put forward your views.
What happens next?

All the comments made will be considered by the review team, and the results of the consultation published.
Service Chiefs and Ministers will then consider revised proposals before an announcement on the new schemes and implementation begins.
This will all take time, and new arrangements will not be in place until at least 2003/04.
Do I have to make any decisions now?

No. We just want your views about our ideas.

Contact addresses

Mr Jonathan Iremonger
Room 5/72
Metropole Building
Northumberland Avenue

Telephone (020) 721 89615
Fax (020) 721 81505
Electronic Mail Addresses:

CHOTS: SPPolPens-Consultation


The consultation documents can be found at the following internet sites: