Armed Forces must wait five years longer for pension

By James Kirkup, and Thomas Harding
9:38PM BST 18 Jun 2012

http://www.telegraph.co.uk/news/uknews/defence/9340188/Armed-Forces-must-wait-five-years-longer-for-pension.html

Soldiers, sailors and airmen may have to give as much as 23 years’ service before being able to leave with their pensions, up from as little as 18 years at present.

The result would be that the effective minimum age for leaving the Services with an immediate pension would increase from 40 to 45.

The plan, disclosed in a Ministry of Defence document, has emerged amid complaints from soldiers that they have been targets for redundancy days before qualifying for their pension. Many soldiers claimed they were sacked and denied an immediate pension, in some cases after the MoD miscalculated the length of their service.

To reflect the risks and rigours of military service, Armed Forces pension rules allow Service personnel to retire and take part of their pension relatively early.

Under the main Forces pension scheme, personnel aged over 40 who have served for at least 18 years get the right to claim an immediate pension and tax-free lump sum on leaving, and a second lump sum when they turn 65.

However, most officers can take advantage of a better deal that allows them to qualify for an immediate pension after 16 years, typically leaving with an annual income of around £12,000, and a larger lump sum when they reach the civilian retirement age.

Under a review known as the New Employment Model (NEM), the Coalition is planning an overhaul in the terms and conditions of employment in the Armed Forces.

The study is confidential, but details have been disclosed in an internal presentation for Armed Forces personnel to prepare them for changes in their pensions.

The prospect of an early pension is a major recruiting tool used by the Armed Forces. Defence chiefs also use it to persuade valued officers and senior non-commissioned officers to remain in service.

However, the system is expensive. The MoD estimates that one third of the money it spends on pensions goes on Early Departure Payments to people who have left services before the age of 55.

To cut that cost, the NEM has recommended a significant increase in the thresholds for early pension payments. The minimum increase in service recommended by the NEM study is two years, but the maximum is five years.

The exact increase in the threshold is subject to a consultation with Service personnel, but will not be popular. “A lot of guys who are mid-career are basically hanging on for the [immediate pension] — another five years would be hard to take,” said one serving officer.

An MoD spokesman confirmed the proposals, but said pensions would still be generous.

The department is also cutting costs by reducing the Army from 102,000 to 82,000, and last week announced a fresh round of redundancies. Some of those affected believe they have been laid off because they are approaching immediate pension age and several accused the MoD of deliberately miscalculating their entitlement.

“The redundancy paperwork that the Army gave me is incorrect, but I stand to be made redundant approximately eight months from immediate pension point (IPP),” said a major with 15 years’ service.

Another major said he knew of 38 officers who were “targeted specifically because we were pre-IPP and therefore cheaper to get rid of”.

The MoD insisted that no personnel had been targets for redundancy, and said the compensation scheme more than made up for the loss of an immediate pension.