YOUR AFPS75 commutation has now been halved! Thanks, MoD

Discussion in 'Army Pay, Claims & JPA' started by Matelot, Sep 9, 2007.

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  1. As slipped out during a quiet August - did anyone else notice 2007DIN01-018, halving the AFPS75 maximum commutation from 50% to 25%, with effect from all service accrued since 2006? This is awful news for people not yet at IPP - commutation money is tax-free, whereas the income that it replaces is taxable, so looks like another stealth tax, and one that only affects ex-Armed Forces with a job after going outside (most other pension schemes don't allow commutation until 65, so income tax liability is minimised).

    This seems to be a huge change in the T&Cs of serving personnel, despite the fact that we were promised no change in the AFPS75 terms, and the DIN also says that although it comes from the Finance Act 2004 (ie the year before AFPS 05), no one is allowed to revisit their decision to transfer and yah-boo-sucks to the lot of you.

    It looks to me that the MoD didn't notice the change in the law when it was introduced, have now realised it, and are sticking 2 fingers up to all of us on AFPS75 by not allowing any revisiting of the Offer to Transfer. After all, the OTT paper we all got had the figures based on 50% commutation (which was wrong, even at the time).

    If you think how many people leave after 16 years, then get a job with an average salary, so the pension income may well push the tax bracket to 40%, this increases the income tax take from future service pensioners (especially the younger ones who stayed on AFPS75 but have years to go before IPP) by a massive amount. I fully understand the fact that the Finance Act was approved by Parliament (I bet no MP thought about Armed Forces pensions though when they talked about commutation), and the MoD were probably taken unawares, but for chrissakes, is there no-one in the ministry who looks at the effect of legislation on serving members?

    Anyone for a representation?
  2. oldbaldy

    oldbaldy LE Moderator Good Egg (charities)
    1. Battlefield Tours

  3. I thought we (HMF) were excempt this change due to our unique career length ie normal retirement age of 40.

    I'm sure I read somwhere that our pensions would not be affected by the 2004 act.
  4. Sorry I didn't notice the other thread - but it's the fact that we can't revisit OTT that winds me up. For the people 2 or 3 years in, who just made it onto AFPS75, this costs them thousands and thousands of pounds in lump sum (it's called "resettlement commutation" for a reason), and nets the government lots of extra income tax...

    What possible justification have SVPA/MoD got for not allowing people to look at AFPS05 again, especially as they mislead people as to the benefits of staying on AFPS75?