Future Armed Forces Pension Scheme: Key Points

The main features of the new scheme are (new features in bold):

One scheme for all – including Reservists.
A Career Average scheme (rather than final salary).
No personal contributions.
A pension accrual rate of 1/47th for all.
Benefits earned under the new scheme while serving will be increased (‘revalued’) annually by an average earnings index.
The Deferred Pension age (known as the Preserved Pension age in the current schemes) will be linked to the State Pension Age.
An Early Departure Payment (EDP), consisting of a lump sum and income stream, with further work being undertaken to investigate the potential for allowing greater flexibility in how the EDP is taken.
Normal Pension Age of 60, though pension can be taken earlier (from 55), actuarially reduced from the Deferred Pension Age, as it will be paid for longer.
No automatic pension lump sum, but with the option of generating a lump sum by commuting (reducing), the pension income.
Pensions in payment and Deferred Pensions to increase in line with the Consumer Prices Index (CPI).
Dependants’ benefits, ill-health pensions and death-in-service benefits in line with AFPS 05 provisions.
Abolition of abatement if an individual returns to the Services after retirement.
A break of five years or less will be treated as continuous service for indexation.
Annual pension forecast statements.
A Government commitment that there should be no further changes to public service pensions for the next 25 years.