TA Pensions - the final answer

Discussion in 'Army Reserve' started by dra1n5, Mar 10, 2008.

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  1. I see that TA Pensions has been raised again on the TA100 thread. I also checked out the existing pension thread but found no real conclusion to that one.

    If you havn't already seen it the current issue of TAQ magazine has the definitive answer. You'll find this publication at your TAC or on Armynet.

    It has also been the subject of questions in theHouse of Commons, the latest being on 18 February 2008. The answer included the following:

    "An Employment Tribunal held in June 2007 accepted that the MOD had justifiable reasons for excluding reservists serving on man training days, voluntary training or other duties from the armed forces pension schemes. It affirmed that the Department's longstanding approach of paying an annual bounty for volunteer reserve service, in recognition of the different terms and conditions, remains valid."

    See http://www.theyworkforyou.com/wrans/?id=2008-02-18c.186783.h

    The best advice now seems to be to invest some or all of your bounty to help you in your dotage. Don't follow thgis myself, you understand, but it does make sense.
     
  2. No it doesn't!

    the_Bat
     
  3. Interesting that. I've heard a very senior Tax man (head of a large Tax region) suggest that this may actually breech tax law at some point. If I understood him correctly, to suggest that Bounty is in lieu of a Pension and should be invested in a pension fund could attract some interest from HMRC on the grounds that bounty is a contribution to a pension fund........
     
  4. OldSnowy

    OldSnowy LE Moderator Book Reviewer

    Then don't invest your Bounty, but put in a proportion of your TA Pay. It is still (I hope!) possible to claim the tax back on this. I've been doing it for years, declare it each year, and get my Tax Code adjusted accordingly. Of course, check with an IFA/tax expert first, etc., but I am pretty sure that TA income is allowable for this as it is not part of any other Pension scheme.
     
  5. Make no mistake about this all thoughs that want a TA pension if they get one will have shot them selves in the foot becuase we will loose our bounty and the monthly payment for a TA pension for a guy that has done say 2 op tours over say 30 years will be about 7 pound a week if that, all thoughs that want a pension just stick your bounty in a high interest account every year and dont touch it till you leave hey presto a nice little earner but no they want to spend there bounty on a holiday, new tv, kitchen etc and talking to some people in my unit they seam to think a TA pension would be similar to a Regs pension(cloud cookcoland the give me give me give me generation) and they still want there bounty as well "becuase its a retention tool" if a bounty is a retention tool give the regs one too
     
  6. Do you get all your tax back, I believe my TA pay puts me into the 40% bracket.
     
  7. scaryspice

    scaryspice LE Moderator

    Yes you get tax relief at 40% on whatever you've invested. I've been doing this for years as well at the suggestion of my IFA (good man!) and HMRC does not seem to have any problem giving me higher rate tax relief.
     
  8. The regs have their own retention tools! and when they re-enlist the get a lump sum as well so don't go down that road! What some people are asking for is a pro rata pension not one for doing 7-8 days per month, maybe a 50% pension over service career if you are listed as green and fit to deploy why not?
     
  9. My point in posting this was to try to make it clear that calling for a TA pension is, unfortunately, best described as flogging a dead horse. Whatever we think are the rights or wrongs, it has been explored through the legal processes and the Tribunal fully agreed with the MoD position.

    I would also note that for those of us who actually do more than a few days a month, the tribunal did say that pension provision should be examined. This should cover those who do FTRS, call up or enter into the new extended service contracts.

    So, for the majority of use, stop dreaming of the benefits of a regular army style non-contrintory pension scheme and count the blessings of a tax free bounty. As I said before, if you want to enjoy the benefits of this in your retirement, invest some or all of it wisely instead of spending straight away on your missus and the kids (like I have to.....)!
     
  10. OldSnowy

    OldSnowy LE Moderator Book Reviewer

    Already done - check out the Reserve Forces Pension Scheme - it was specially designed for FTRS and ADC contracts, plus periods of mobilisation (if that's what you want).

    All you need to know on SaBRE website here:

    http://www.sabre.mod.uk/files/pdf/Reserve_Forces_pension_and_compensation_benefits.pdf
     
  11. The TA access to the AFPS75 or AFPS05 was heard in the ET in June 07 and was taken under the heading of Quale & Others v MoD.

    The ET considered that the Bounty payment was 'in lieu' of pension because the MoD were able to show using Government Actuary Dept report that financially a TA member was better off getting a bounty that getting a pension. I do not believe they actually said that the bounty was paid in lieu of a pension but certainly the ET thought this was the case.

    I believe the judgement was flawed for a number of reasons.
    1. Pay - the value of AF pay is compared to civilian pay. Fact - (read AFPRB07 report).
    2. AF pay has an abatement applied as a consideration for the non-contributary nature of the AFPS.
    3. Reg and TA are on the same pay scale. Lets explore that...

    AF Pay is 100%. The abatement is applied (-4% was 7%) so AF pay is now at 96%. Add X Factor to Reg pay at 13% and for TA 6% that is our pay scales!

    So I woulld suggest the abatement has been deducted from TA pay FOR PENSION PURPOSES and TA can not receive any benefit from this deduction from wages!!!!!!!! Theft in my book!

    Interesting comments about HMRC being interested in the Tax free bounty as 'in lieu of pension'. Maybe we should all apply to HRMC for a rebate ??

    35k rebates to process - I like it!!

    TZA
     
  12. So if I put my TA Pay into a private pension, do I get the tax back on it?
     
  13. I reckon I'm probably a relatively typical TA earner profile. Thinking about my TA and pensions made me think of 2 questions!

    So, I pay basic rate income tax on my TA pay at 20% - my occupational pension is contracted out, so does my rebate from the state second pension include the payments that I have made due to the TA? If not do I then have a TA generated S2P?
     
  14. msr

    msr LE

    Speak to an Independent Financial Advisor.

    msr
     
  15. Sorry, the implied task was that if I'm thinking this and i'm relatively typical then someone else must have already asked the question!