In the May issue of Pathfinder the Forces Pension Society article was about your preserved or deferred entitlements. This month’s article – by Mary Petley - aims to push home how important it is that you remember to claim your dues and to highlight the thousands of unclaimed AFPS 75 preserved pensions sitting waiting to be claimed...
The Forces Pension Society receives many enquiries about what pension benefits might be awaiting fathers or fathers-in-law and the same issue crops up regularly on ARRSE, Rum Ration and E-goat.
Given that every year many thousands of pounds in pensions go unclaimed, it is important that the information that follows is widely understood. If, once you have read this article, you think you know someone who has a preserved pension waiting to be claimed, pass this magazine on but do remember to keep a record of how and when to claim yours!
Concentrating first on those of you who are in the resettlement process. The vast majority of service personnel leave long before they are entitled to draw their pension or Early Departure Payment (EDP) Scheme benefits – this means their benefits will be preserved or deferred. Veterans UK do their best to ensure that pensions are paid when they are due but they do not keep track of those who leave with preserved or deferred pension. They do run campaigns to track down those with unclaimed pensions – and are actively doing so at the moment but it is an uphill task. To avoid delays in receiving your pension you must to remember to claim about six months before it is due to be paid!
AFPS 75 preserved benefits are payable at age 60 or 65 depending upon when they were earned. The pension earned up to and including 5 April 2006 are due at 60 and benefits earned after that date are payable at age 65. You can, however, ask to have the part of the pension due at age 65 paid at age 60 but, if you did so, it would be actuarially reduced to take account of the fact that it is in payment for longer that the scheme anticipated.
AFPS 05 preserved benefits are payable at age 65 and AFPS 15 deferred pensions are payable at your State Pension Age. Both can be claimed at any time after age 55 – again with actuarial reduction. If you leave with EDP benefits you do not need to claim your preserved or deferred benefits, unless, of course, you want to claim them before age 65. Claims should be made on an AFPS Form 8, which is available on the internet.
Turning now to the thousands of pensions which remain unclaimed for AFPS 75 – it is this, the oldest of the schemes, where the problem of unclaimed pension lies. There are several reasons why pensions are unclaimed, but the fact is that the sums of money involved, whilst modest in many cases, could make a big difference to the quality of life of their rightful owner.
For some older veterans, pension were a bit of a foggy area as, prior to April 1975, an officer had to serve 16 years from age 21 and other ranks (ORs) had to serve 22 years from age 18 to qualify for any form of pension at all. Some may have left with a Resettlement Grant but many left with nothing.
AFPS 75 preserved pensions were introduced for those in service in the Regular Armed Forces on 1 April 1975 but, in order to qualify, an individual had to be age 26 or over when he or she left and to have at least five years reckonable service for pension purposes. Reckonable service is paid service over the age of 21 for officers and age 18 for ORs. These qualification criteria are called the ‘Vesting Period’.
Those who left Service before 1 April 1975 were not entitled to preserved pensions, neither were those who left after this date without ‘Vesting’. In the rare case where someone left after 1 April 1975 without a preserved pension (because they hadn’t ‘Vested’) and rejoined within 30 days, they were allowed to count the earlier period of service together with the new for future qualification.
In 1978 the criteria were changed slighted slightly, in that the requirement to be aged 26 or over was removed. The five years reckonable service criteria remained until 6 April 1988 when it was reduced to two years.
Preserved AFPS 75 benefits usually comprise a pension in the form of a taxable annual income and a one-off tax-free lump sum equal to three times the annual income payable. If the pension is very small, the preserved pensioner is often invited to take an annual taxable lump sum rather than a monthly pension and, in some cases, the pension is converted into a one-off taxable lump sum under the small pension commutation rules. Most of these preserved pensions would have been payable at age 60 but, where some of the pension was due at 65, remember that it can be claimed as early as age 60 with actuarial reductions.
Some veterans might think there preserved benefits are so small as to be not worth claiming – but take a look at this:
Someone who left in April 1978 with a preserved pension of £800 would now have a preserved pension of £4,263.94 and a preserved pension lump sum of £12,791.82.
Someone who left in April 1982 with a preserved pension of £1,100 would now have a preserved pension of £3,451.30 and a preserved pension lump sum of £10,353.90.
Someone who left in April 1985 with a preserved pension of £1,500 would now have a preserved pension of £4,011.84 and a preserved pension lump sum of £12,035.52.
These sums, which have been increased to take account of inflation, could make a very real difference to a lot of lives.
Some individuals will not have any Armed Forces Pension Scheme entitlement. They are people who joined on non-pensionable terms (being entitled instead to a gratuity on successful completion of their engagement), members of the Volunteer
Reserve, personnel who opted out of the Armed Forces Pension Scheme and those who left with a preserved pension and transferred it out to other occupational pension arrangements.
Those who left with an immediate pension or an invaliding pension will not have preserved benefits to claim.
If you have a relative or friend who thinks they might have a preserved pension as a result of time in the Armed Forces, encourage them to fill in the AFPS Form 8 and send it to the address on the form.
If you are a member of the Forces Pension Society and have questions about this or any other pension issue, contact us on firstname.lastname@example.org
To find out more about us visit www.ForcesPensionSociety.org