From 1 April 2015 the AFPS 15 Career Average Revalued Earnings scheme opened for new joiners and for members who were not afforded protection in the older schemes.

If you have service in the armed forces between 6 April 1975 and 5 April 2005 you will have been contributing to the armed forces pension scheme 1975 (AFPS 1975), unless you chose to move to the armed forces pension scheme 2005 (AFPS 2005) during the ‘offer to transfer’.

If you joined the armed forces after 6 April 2005 you will have been contributing to the armed forces pension scheme 2005 (AFPS 2005).

Unless you had transitional protection from moving to the 2015 scheme you will have moved to the AFPS 15 scheme from 1 April 2015. Members with less than 10 years to go to reach age 55 as at 31 March 2012 had protection from the move and were able to remain in their legacy schemes.

As with all the changes to public sector schemes - which protected older members from a move to the reformed schemes - the armed forces transition was found to be in breach of age discrimination rules and, as per the McCloud judgement, members in scope will be returned to their legacy scheme for the remedy period of 1 April 2015 to 31 March 2022.

At retirement, members in scope will be given a choice as to whether their benefits should accrue from the legacy or reformed scheme for the remedy period. This is known as the Deferred Choice Underpin. From 1 April 2022 the 75 and 05 sections were closed and all active members from that date will accrue prospective benefits in the 2015 scheme.

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The 2015 armed forces pension scheme at a glance

• You do not have to contribute anything.
• Your Career Average Revalued Earnings pension is calculated as 1/47th of each years pensionable earnings, with indexation linked to the Average Weekly Earnings index to ensure that the accrual for each year keeps up with inflation. There is no maximum number of years of service which can be built up.
• There is no automatic lump sum but the annual pension can be commuted in favour of a lump sum at a rate of £1 of annual pension given up in favour of £12 of tax free lump sum.
• Your pension can be paid from age 60 onwards without reduction. It is also possible to access benefits earlier via the payment of an early departure payment (EDP) if you have at least 20 years of service and have reached age 40.
• If you wish to leave earlier than 60, providing you have completed at least two years of qualifying service and have attained age 55 you will be eligible for preserved benefits payable with an actuarial reduction – alternatively they can be paid without reduction from your State Pension Age.
• Medical and dental officers are not normally eligible for EDP.

The 2005 armed forces pension scheme at a glance

• Closed to further accrual but members in the AFPS 15 can retain a final salary link for so long as they do not have a break in pensionable service of 5 years or more.
• You did not have to contribute anything.
• Your pension is calculated as 1/70th of final pensionable earnings for each year or service, up to a maximum of 40 years of reckonable service.
• Your pension can be paid from age 55. It is also possible to access benefits earlier via the payment of an early departure payment (EDP) if you have at least 18 years of service and have reached age 40.
• If you wish to leave earlier than 55, providing you have completed at least two years of qualifying service you will be eligible for preserved benefits – which will be payable in full from age 65.
• Medical and dental officers are not normally eligible for EDP.

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The 1975 armed forces pension scheme at a glance

• Closed to further accrual but members in the AFPS 15 can retain a final salary link for so long as they do not have a break in pensionable service of 5 years or more.
• You did not have to contribute anything.
• Your pension is calculated with reference to your rank and length of service.
• Your pension can be paid from age 55 after 34 years of reckonable service as an officer.
• Transferred in service and added years are excluded for this purpose.

Qualifying and reckonable service

Qualifying service includes your paid service plus certain other periods, for example service aggregated from the AFPS 1975, service transferred into the AFPS 2005 and service on secondment to NATO/UN. Qualifying service does not include added years.

Reckonable service is the service which counts towards the calculation of your pension. For an Officer this starts at age 21, or date of entry if later, for a maximum of 34 years (AFPS 1975) or 40 years (AFPS 2005). Reckonable service includes service transferred from other pension schemes and added years.

You will need to have completed two years reckonable service to qualify for most benefits.

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Leaving the 1975 section early

A pension can also be paid immediately on leaving the armed forces after 16 years reckonable service as an officer. This is known as the immediate pension (IP) point.

Only actual service in the armed forces counts towards the 16 years reckonable service required to qualify for IP.

Once you have completed at least 16 years service as an officer you will be entitled to a pension and terminal grant (three times the pension) on leaving service.

If you leave the armed forces, at your own request, after reaching the IP but before completing your commission or before age 50 you will qualify for premature voluntary retirement. These rates of pension are lower than the IP rates.

If you leave the AFPS 1975 before you reach the IP point, having completed at least two years of reckonable service you will be entitled to a preserved pension and terminal grant payable from age 60, for service before 6 April 2006, and age 65 for service after 6 April 2006. If you claim all the benefits at age 60 they will be actuarially reduced to reflect that they are being paid early.

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Taking a lump sum

The lump sum is known as a terminal grant and is calculated as three times the pension. The terminal grant is free of income tax.

More information on taking a bigger lump sum (resettlement commutation and life commutation) is available in the GOV.UK guidance for AFPS 75 Commutation.

Taking a smaller lump sum and bigger pension is only possible for 2005 section members and is known as inverse commutation. You can give up some or all of your lump sum to provide additional pension benefits for yourself, or for yourself and your dependants.

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Retiring because of illness or injury that is not your fault

Providing you have completed more than two years reckonable service in the AFPS 2015 the scheme provides for 3 tiers of ill health retirement.

Read more information on compensation at GOV.UK