Armed Forces Pension Scheme explained
What is the Armed Forces Pension Scheme (AFPS)?
People working in the services have access to the Armed Forces Pension Scheme (AFPS), one of the largest pension schemes in the UK.
The amount you'll get when you retire will depend on your earnings and how long you have been part of the scheme.
There are around 300,000 active members of the scheme, with 520,000 deferred members and around 440,000 pensions in payment.
AFPS: which scheme applies to me?
The type of Armed Forces Pension Scheme you're part of - and how much you'll end up getting in retirement - depends on when you joined the scheme and how far away from retirement you were when changes to the scheme were introduced in 2015.
These dates will determine whether your eventual pension will be based on your final salary, or on your career average earnings (which is less generous).
There are three Armed Forces Pension Schemes (AFPS) for members of the Regular Armed Forces:
AFPS 75
If you enlisted or were commissioned as a member of the Regular Armed Forces before 6 April 2005, you will have automatically joined the AFPS 75 scheme. From 6 April 2005, AFPS 75 was closed to new members.
AFPS 05
If you enlisted or were commissioned as a member of the Regular Armed Forces on or after 6 April 2005, or accepted an offer to transfer from AFPS 75, you would have automatically joined the AFPS 05 scheme. From 31 March 2015, AFPS 05 was closed to new members.
AFPS 15
All serving members of the Regular Armed Forces and Reserve Forces who joined from 1 April 2015 are members of AFPS 15. AFPS 15 is open to new members and the majority of members of the Armed Forces and Reserve Forces Pension Schemes have now joined AFPS 15.
You are also automatically a member of AFPS 15 if, on 1 April 2015, you didn’t have Transitional (Full) Protection in another Armed Forces Pension Scheme. This means that if, as of 1 April 2012, you had more than 10 years to serve to reach age 55, you would have been automatically transferred into AFPS 15 from AFPS 05 on 1 April 2015.
How much do I contribute to my Armed Forces pension?
Most pension schemes require both employer and employee to make monthly contributions.
However the Armed Forces Pension Schemes are unusual, as you make no contributions. Your pension, when paid, is guaranteed because it is paid by the government out of taxation.
When can I take my Armed Forces pension?
The age at which you get to access your pension, called your 'normal pension age', depends on which arrangement or arrangements cover you.
AFPS 75
If you leave the service at age 55 or over and have completed 34 years’ service (as an officer) or 37 years’ service (as other rank), you will be entitled to a full career immediate pension on your date of retirement.
If you leave the service before age 55 and have completed at least 16 years’ service (as an officer) or 22 years’ service (as other rank), you will be entitled to an immediate pension.
If you leave the service but you have not completed the required years to receive an immediate pension, you will become a deferred member and will be entitled to a deferred pension paid at pension benefit age. This is age 60 for service up to and including 6 April 2006, and age 65 for service after 6 April 2006.
AFPS 05
If you leave the service at age 55 (normal pension age) or over, you will be entitled to an immediate pension.
If you leave the service before age 55, you will become a deferred member and will be entitled to a deferred pension paid at age 65 (pension benefit age). You might also be eligible for either:
- Early Departure Payment (EDP);
- Ill-health pension; or
- Resettlement Grant
AFPS 15
If you leave the service at age 60 (normal pension age) or over, you will be entitled to an immediate pension.
If you leave the service before age 60 (normal pension age), you will become a deferred member and will be entitled to a deferred pension paid at state pension age (currently 66).
If you are in regular service and leave the services before age 60, you might also be eligible for either:
- Early Departure Payment (EDP);
- Ill-health pension; or
- Resettlement Grant
How much will an Armed Forces pension pay in retirement?
The amount of income you'll be paid from your Armed Forces pension depends on the scheme you're in.
AFPS 75
For the vast majority, AFPS 75 is calculated on your final rank and length of reckonable service (the actual years and days that count towards your pension). Members of the Armed Forces with the same rank and same number of years of reckonable service are normally awarded the same pension, regardless of their actual pay either at retirement or discharge, or earlier in their career. This is known as the representative rate of pay for the rank.
Representative pay is worked out using specially selected rates of military salary and does not include extra amounts which those with special qualifications may earn. For those with special qualifications (e.g. medical officers, dental officers, nurses, professional aviators, and clearance divers), your pension is paid according to the standard rates of pension, with an additional supplement for those that qualify.
In addition to your annual pension, you will also receive a one-off pension lump sum (tax-free) of three times your annual pension.
AFPS 05
AFPS 05 is a final salary pension scheme; the pension is based on how much you are earning when you leave service. This means that calculation of your pension benefits is based on the greatest amount of pensionable earnings you received for 365 consecutive days over the last three years of reckonable service (the actual years and days that count towards your pension).
The maximum number of years’ service that can count towards your pension is 40 years. In addition to your annual pension, you will also receive a one-off pension lump sum (tax-free) of three times your annual pension.
Example
Your pension is 1/70th of final pensionable earnings multiplied by the years and days of reckonable service.
If your final salary is £40,000 after 25 years’ service, your annual pension would be calculated as follows:
£40,000 x 25 x 1/70 = £14,286
You would also receive a lump sum of £42,858 (three times your annual pension).
AFPS 15
AFPS 15 is calculated using a Career Average Revalued Earnings (CARE) system. This means that the pension is calculated according to your average earnings over your career.
Your pension will start to build up from your first day of paid service and the pot increases with inflation and further service years are added. This process continues each year until you leave the Armed Forces, and this pot will become the pension that you’ll receive.
Example
Every year, the Ministry of Defence adds 1/47th of your annual pensionable earnings for that year to your individual fund.
This pension pot starts to grow from your first day of paid service and is carried forward into each year where it increases in line with inflation (we have used 1.5% in the illustration below).
| Salary | Pension | Inflation-linked pension increase | Total pension to date | |
| Year 1 | £35,000 | £745 | £11 | £756 |
| Year 2 | £36,000 | £766 | £11 | £1,533 |
| Year 3 | £37,000 | £787 | £12 | £2,332 |
What happens to my Armed Forces pension when I die?
This can vary from scheme to scheme, but as a general rule your eligible dependants – spouse, civil partner, eligible partner or eligible children – will receive benefits after you die. These may consist of a one-off lump sum (tax-free) and a taxable pension.
In all cases, dependants’ benefits are only payable if you have completed at least two years of qualifying service.
AFPS 75
For attributable deaths from 31 October 2000, and non-attributable deaths from 1 April 2015, a dependant’s pension is payable for life.
If a surviving spouse or civil partner’s pension had previously been suspended due to their remarriage, new civil partnership, or cohabitation before 1 April 2015, it will remain suspended. If the relationship ends or ended on/after 1 April 2015, the spouse or civil partner can apply for the pension to be restored.
AFPS 05
A dependant’s pension is payable for life, irrespective of remarriage or the forming of a new civil partnership or cohabitation.
AFPS 15
A dependant’s pension is payable for life, irrespective of remarriage or the forming of a new civil partnership or cohabitation.