Are you being medically discharged from the Armed Forces? David Marsh, Pensions Secretary of the Forces Pension Society, explains what you’re likely to receive from the Armed Forces Pension Scheme.

To begin with we should point out that there is quite a difference between your Pension Scheme and the Armed Forces Compensation Scheme and War Pension Scheme. This article specifically deals only with the Armed Forces Pension Schemes (AFPSs) 2005 and 1975.

In the case of both schemes entitlement to Invalidity Benefits are only payable if you have completed at least two years’ reckonable service.

The simple definition of each Tier applicable to AFPS05 is as follows:

Tier One: Your medical condition prevents you from doing your job in the Armed Forces but is not sufficiently bad enough to prevent you from obtaining gainful employment back in civvy street.

Tier Two: Your medical condition is not sufficiently severe that you are left permanently incapable of gainful employment, but your prospects of a solid second career are significantly impaired.

Tier Three: Your medical condition is such that it is considered you will be permanently incapable of any further full time employment.

To help you link each Tier with the Tariff levels used by the Armed Forces Compensation Scheme, Tier One is effectively equivalent to Tariffs 12-15, Tier Two to

Tariffs 7-11, and Tier Three to Tariffs 1-6.

Here’s what you get:

GRATUITY ON EXIT (TAX FREE)

AFPS75: Three times the Pension payable using the enhanced ‘Invaliding’ Rates

AFPS05: Three times the Pension payable for those discharged under Tier Two and Tier Three and those under Tier One who are aged 55 or more.

PENSION ON EXIT

AFPS75: Annual Pension payable using enhanced ‘Invaliding’ Rates. Index Linked from the day of receipt. Tax Free if your discharge is attributable to Service.

AFPS05: Tier One: If aged 55 or more on discharge a pension based on the length of their reckonable service. Tier Two: Pension based on your reckonable service on your date of discharge, plus one third of further potential reckonable service between date of discharge and 55th birthday. Tier Three: Pension based on your reckonable service on your date of discharge, plus one half of further potential reckonable service between date of discharge and 55th birthday. However, if this equates to less than 20 years then 20 years is to be substituted for this calculation.

LUMP SUM ON EXIT (IF NO GRATUITY IS PAYABLE)

AFPS75: Not Applicable

AFPS05: Tier One: If you have not yet completed 18 years’ reckonable service and are aged under 40; a tax free Lump Sum based on one-eighth of your pensionable pay, multiplied by the length of your reckonable service (subject to a minimum of six months’ and a maximum of 24 months’ pensionable pay).

EDP LUMP SUM ON EXIT

AFPS75: Not Applicable

AFPS05: Tier One: If you have completed at least 18 years’ reckonable service and have past your 40th birthday but not your 55th birthday, equal to the Preserved Gratuity you have earned that is payable at age 65. Tiers Two and Three: Not payable

EDP INCOME STREAM ON EXIT

AFPS75: Not Applicable

AFPS05: Tier One: If you have completed at least 18 years’ reckonable service and have passed your 40th birthday but not your 55th birthday, equal to 50% of the value of the pension earned on exit at the 18/40 point; increased by 1.6667% for each complete additional year beyond the 18/40 point. Tiers Two and Three: Not payable

PRESERVED PENSION

AFPS75: Not Applicable

AFPS05: Tier One: Payable at age 65. Tiers Two and Three: Not payable

PRESERVED GRATUITY

AFPS75: Not Applicable

AFPS05: Tier One: Payable at age 65. Tiers Two and Three: Not payable

The formulas above demonstrate what financial rewards are payable to you from your particular pension scheme on the basis of a medical discharge, whether the cause is due to, or aggravated by, your service in the Armed Forces. If it transpires that your medical discharge was due to, or aggravated by, your service in the Armed Forces, then these payments will be supplemented by awards from either the War Pension Scheme or the Armed Forces Compensation Scheme – whichever is applicable to you. (In some circumstances, it could even be both.)

If you find that you are in the position of a potential medical discharge and you want to have some idea of the award you could receive from your pension scheme you should contact the Joint Personnel Administration Centre (JPAC) for an assessment of potential payments due to you.

If you are unhappy with the response you receive, would like a second opinion, or merely an independent assessment of potential death benefits payable to your dependants, you can – if you are a member – obtain one from the Forces Pension Society.