New forces pension scheme confirmed
16 October 2012
A single armed forces pension scheme based on career average earnings will increase the forces retirement age from 55 to 60 and replace all existing forces pension schemes, it has been announced.
The scheme, which comes into effect from April 2015, will see 31.5 per cent of forces personnel's career average salary paid into a pension pot each year, and will apply to reservists as well as regulars.
Despite the rise in the pension age to 60, the MoD says that not linking forces pension age to the state pension age means the scheme is among the best in the public sector.
A period of consultation earlier this year led to the MoD increasing the options available for personnel who have served for 20 years by the age of 40. They will now be able to convert their Early Departure Payment lump sum into additional monthly payments.
The changes announced will not affect accrued rights of those currently serving or the age at which their accrued pension benefits can be drawn.
Personnel who were within 10 years of their pension age on 1 April 2012 will also receive 'transitional protection', meaning they will not be transferred to the new scheme.
The new plans are "more affordable and sustainable for the long-term", the Ministry of Defence said.
"The government had to make some tough decisions to ensure sustainable public service pensions, but recognises the unique commitment made by the armed forces and therefore protected them as much as possible, making these changes in the fairest way possible," Personnel, Welfare and Veterans minister Mark Francois said.
"Armed forces personnel will continue to receive one of the best and most valuable pensions in the public and private sectors, maintaining the non-contributory element, an early pension point at 40 and a lower Normal Pension Age than other public sector employees."