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British Armed Forces AFPS 05 Pension

You need to have at least two years’ reckonable armed forces service before you are entitled to receive your benefits and your annual pension depends on your final salary and how many years you have served.

Each year is worth up to a 1/70th of final pensionable pay up to a maximum of 40 years. You will also receive a pension lump sum (usually tax free) of three times your annual pension.

1. For Example
2. Retiring at 55 or Older
3. Retiring Before the Age of 55
4. Early Departure Payments Scheme
5. Ill Health Benefits
6. Tier 1
7. Tier 2
8. Tier 3

1. For Example

For example, if you served for 25 years and your final salary is £40,000 your annual pension would be:

£40,000 × 25 × 1/70 = £14,278

You would also receive a pension lump sum of £42,834

If you served for 10 years and your final salary is £25,000 your annual pension would be:

£25,000 × 10 × 1/70 = £3,571

You would also receive a pension lump sum of £10,713

There are always a lot of options with pensions as there are so many different variables around length of service and retirement age. Some of the options are listed below.

2. Retiring at 55 or Older

If you retire at 55 or above you receive an annual pension and your pension lump sum. If you retire between the ages of 55 and 64 your pension will be decreased because you will be receiving it for a longer period than if you retired at the standard age of 65.

3. Retiring Before the Age of 55

If you have become permanently unable to work full time due to ill-health you may be eligible to have a Preserved Pension. This means you can claim your annual pension and pension lump early. Otherwise you will have to wait until you are at least 40 and have served for at least 18 years where you become part of the Early Departure Payments (EDP) scheme.

4. Early Departure Payments Scheme

The EDP scheme exists to compensate for the fact that the majority of job roles in the Armed Forces are physically demanding and so may not be suitable for people right up to retirement age.

To receive EDP you need to be over 40 and to have served for at least 18 years – known as the EDP 18/40 point.

If you leave the Armed Forces between the EDP 18/40 point and the age of 55 you receive a tax-free lump sum that is three times your annual pension and a taxable income of not less than 50% of your annual pension. This rises to 75% when you reach the age of 55.

5. Ill Health Benefits

If you leave the Armed Forces early due to health or injury, or are medically discharged you may be eligible for an ill-health pension and lump sum.

You need to have two years’ reckonable service and the amount you receive will depend on the degree of your ill-health, your length of reckonable service and your final pensionable pay. There are three tiers of payment:

6. Tier 1

This is a tax-free lump sum for people who are medically discharged from the Armed Forces because they are not able to do their Service job, but who will not be significantly restricted from getting gainful employment outside of the Armed Forces.

This is calculated from 1/8th of your pensionable pay multiplied by the length of your reckonable service, subject to a minimum of six months pensionable pay and a maximum of two years pensionable pay.

If you’ve passed the EDP 18/40 point you’ll receive your EDP lump sum and income payments instead.

7. Tier 2

This is for people who are medically discharged from the Armed Forces with a condition that is not classed as leaving you permanently incapable of gainful employment, but that will significantly impair your employment prospects. It consists of a pension lump sum (normally tax-free) and a taxable ill-health pension.

The annual pension you receive is calculated by the number of years of reckonable service plus one-third of the time remaining until the normal retirement age of 55. Your lump sum will be three times your annual pension. This replaces the EDP for people serving beyond the 18/40 point and no further pensions are payable at the age of 65.

8. Tier 3

This is for people who are discharged with a serious disability which leaves them permanently incapable of any further full-time employment. It consists of a pension lump sum (normally tax-free) of three times your annual pension and a taxable ill-health pension. This is calculated from your years of reckonable service plus half the time remaining until the normal retirement age of 55. The minimum possible is based on 20 years of service. This replaces the EDP for people serving beyond the 18/40 point and no further pensions are payable at the age of 65.

For queries regarding AFPS 05 contact your unit admin office otherwsie you can contact the Service Personnel and Veterans Agency (SPVA). The address is:

Pensions Division
Mail Point 480
Kentigern House
65 Brown Street
Glasgow
G2 8EX

Phone: 0800…
Military: 94560 3600
Email: JPAC@afpaa.mod.uk

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