Terminal Grant and Pension

#1
I read something on part one orders today and am hoping someone can shed some more light on the matter. Basically it said that the allowing of commuting up to 50% of your pension is to change as of next year to a maximum of 25%. It also says that this will be reflected in the pension calculations soon. Is this correct or am i reading it wrongly, if so this has got an amazing impact on my plans for getting out of the green stuff and settling to civvy steet. can anyone help?
 
#3
Booklet AFPS 75 explains it clearly. This can be found on ArmyNet. It's not quite as bleak as it first seems, but yet again we have not been correctly informed of this change!!
 
#4
When you use the Pensions calc it gives you the following message;

Note: The forecast has calculated a maximum of 50% commutation for all service, however, for service after 6 April 2006 only 25% can be commuted. The calculator will be updated but in the meantime if you require an accurate forecast including resettlement commutation please contact JPAC at JPAC@spva.mod.uk.

Is this not a change in terms of service? Surely that cannot be done without consent? Looks to me as if it is.
 
#5
Papa_Lazarou said:
for service after 6 April 2006

MMMmmm, would that be people joining after then or people leaving?

I suspect the latter but can any gurus confirm?
 
#6
Is this retrospective for those who signed up under the old terms and conditions of service? If it is, then it would be grossly unfair but the statements about AFPS 75 and AFPS 05 on the Veterans Agency website would indicate otherwise. Can anyone clarify?

The new regs appear to conform with recent civvy pension legislation and this is not all bad news for those who serve a longer career. Having paid a proportion of my pre-JPA RN SSP (Special Service Pay) into a FSAVC (Free-Standing Additional Voluntary Contributions) pension scheme with maximum tax rebate for several years while serving, the new laws enabled me to draw 25% of my FSAVC pension pot as a lump sum at the age of 55 and to choose my own annuity provider. If I wanted, I could have transferred the pot to another pension scheme or deferred payment of my annuity up to the age of 75 while leaving the pot to grow. Few of these options would have been available to me a couple of years ago.

The straight service pension has always been a good deal but more flexibility, such as the option to transfer it to another scheme on release, would be no bad thing. Anyway, watch out when you go outside as it can be a minefield. Seek the advice of the White Ensign Association if RN/RM, the Veterans Agency or an IFA (Independent Financial Adviser) before making any important decisions but be aware that many of the latter are unfamiliar with the Armed Forces Pension Schemes.
 
#8
Its not about terms of service - this rule applies to pension funds hosted in the UK whether you are military or civilian.

2007DIN01-018

The finance act 2004 has made these changes. The din does say that these changes do not affect your choice to stay or transfer from AFPS75. Aparantly the changes happened after the OTT process, but as far as i'm aware i signed my OTT in 2005, the year after the Finance Act. The first i heard about commutation changes was when i saw the DIN about 2 weeks ago. Something doesnt quite add up (not least my commutation)!
 
#9
Was on a resettlement finance brief yesterday - financial advisor mentioned this.
He said it dropped from 50% to 25% from 2006 - but only years served from 2006 will be affected (years served before 06 then you still qualify for 50%) - so for someone with a runout date in the next year or 2 - the impact will be a couple of hundred quid less able to commute.
Still, sneaky little change - buried this info since 2006 didnt they!!
 
#10
HEINZ-57 said:
Was on a resettlement finance brief yesterday - financial advisor mentioned this.
He said it dropped from 50% to 25% from 2006 - but only years served from 2006 will be affected (years served before 06 then you still qualify for 50%) - so for someone with a runout date in the next year or 2 - the impact will be a couple of hundred quid less able to commute.
Still, sneaky little change - buried this info since 2006 didnt they!!
Phew!!!! I'm alright jack :)
 
#11
I think I might just change my terms of service, seeing how the Gov keeps changing mine. Can I opt out of Afghan next year?

PS - If anyone from the Gov is reading this, any chance you can sort out the 5 months of wages disruption as well. Bunch of cnuts
 
#12
163/100 RESETTLEMENT COMMUTATION – ARMED FORCES PENSION
SCHEME 1975 (AFPS 75) ONLY
Reference:
A. 2007 DIN01-018.
1. Reference A details the changes to resettlement commutation. For service after 6
Apr 06 an individual can commute up to a maximum of 25% of their immediate
pension entitlement (inclusive of the proportion of Terminal Grant accrued after 6 Apr 06).
Rules for service prior to 6 Apr 06 are unchanged; an individual can commute up to a
maximum of 50% of that immediate pension entitlement, excluding the Terminal Grant.
2. These changes have been enacted under the Finance Act 2004 and are not MOD
policy changes. The Pensions Calculator will be amended in due course to reflect these
changes.
Issue 08/07 DSPS(A)163/100/SA Pens and Svc Funds
 
#13
So has the pension calculator been "updated" ? I havent checked it for a while, and being the sad git I am, had worked out to the last penny what i was going to do with it. Now it looks like I will have to go back to my IFA and do it all again, and let's be honest I can think of better things to do with my time, like watch paint dry or work out when the UNICOM Central Server will become live :oops:
 
#14
They do this because soldiers cant complain. They just publish it on P10s and say 'thats it - abide by it' Makes me friggin furious
 
#15
bullshit said:
They do this because soldiers cant complain. They just publish it on P10s and say 'thats it - abide by it' Makes me friggin furious
You saw this bit then?

2. These changes have been enacted under the Finance Act 2004 and are not MOD policy changes
 
#16
F*"King outragous, this is clearly a change to terms of service, call me cynical but this happens after we have all opted for either AFPS75 or 05, so in theroy now you cant commute as much, so smaller tax free lump sum, more taxable monthly pension. yet again more cost cutting from the dictatorship at No 10.
 
#17
You are better going to a bank for a short term loan anyway....because if you work out how much you have repaid at age 55 with your resettlement commutation repayments, you will see that you have repaid the lump sum in double if not more !!!!!!!
 
#18
JPmoleAC said:
You are better going to a bank for a short term loan anyway....because if you work out how much you have repaid at age 55 with your resettlement commutation repayments, you will see that you have repaid the lump sum in double if not more !!!!!!!
AbsouF**Kingloutly, do the maths from the pension calculator, I worked in a job that dealt with pensions and the amount you pay back is outragious, I would always advise that it is only good if you needed a fast injection of cash, which you can take for up to 1 year after discharge, however, as you say a loan would be cheaper.
 
#19
Slow down lads and have a think,

I'll happily do the maths for you (as I've done them for me).

You should commute the maximum amount immediately, then as long as you have the willpower you should invest it in a decent savings account. If you let it accrue iinterest over 15 years you will find that even at relatively low rates of interest ie 3.5% (bearing in mind you can get much higher at the mo) then your total at age 55 will be far more than if you didn't take it.

Better that it's in your pocket than the Gubbermints.
 
#20
I did the maths and it comes thru at about 8.2% APR. Wow thought me BUT - it is not taxable, so if you dont take it and this is money is added to your wage you will pay full income tax on it.
 

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