Ill-Health Benefits - Non-attributable ill-health benefits
Armed Forces (Pensions and Compensation) Bill
8:55 am
General Invaliding Benefits
16 A Member serving within the Armed Forces with reckonable service of less than 2 years will have no entitlement to an award in the case of non-attributable invaliding.
17 A member serving within the Armed Forces who is invalided with reckonable service of at least two years may be awarded an ill-health pension or gratuity. The benefits will be calculated according to the level of ill-health.
18 Invaliding pensions will be index-linked as soon as they come into payment.
19 The ill-health pension benefits will be calculated according to the level of ill-health.
Tier 1
20 Members invalided out of the Service because they are unable to do their Service job, but whose earnings capacity in civilian life is not affected, will be awarded a gratuity. The gratuity will be related to the member's salary and the number of years served. The gratuity will vary with the length of service, calculated as 1 months' pensionable pay for each year's service with a minimum payment of six months' pensionable pay and a maximum payment of two years' pensionable pay. The purpose of the gratuity is to help the member adjust to his/her new circumstances. However, if the member has passed the EDP, he/she would receive an Early Departure lump sum and income payments (see section 3) up until age 65 when the preserved pension comes into payment.
Tier 2
21 Members who are invalided out with an impairment that significantly affects their earnings capacity in civilian life will be awarded a pension lump sum and an ill-health pension enhanced by one-third of their remaining service (based upon the normal retirement age of 55).
Tier 3
22 Members who are invalided out of the Service with a serious disability which renders them permanently incapable of any further employment will be awarded a pension lump sum and an ill-health pension enhanced by half of their remaining service (based upon the normal retirement age of 55) with a minimum pension guarantee of 20 years' accrued pension.
Attributable ill-health benefits
23 Attributable ill-health benefits will not be provided under the new AFPS.A separate Compensation Scheme has been set up which awards lump sums for pain and suffering and a Guaranteed Income Stream (GIS) for loss of earnings capacity. See separate framework document on the new Compensation Scheme for details.
24 It should be noted that when the GIS is calculated the level of ill-health pension is taken into consideration and the GIS abated to avoid double compensation.
Death Benefits (Lump Sums)
General
25 The scheme administrators will award a death in service benefit. A member may nominate a person to receive such a benefit and there will be provision for such nominations to be anonymous where there are personal sensitivities. If there is no currently valid nomination, scheme administrators may pay a Death-In-Service benefit to a spouse or registered partner (in the latter case subject to confirmation that a substantial relationship was extant at the time of death) or, where there is no spouse or registered partner, to dependent children. Where none of the above applies, a death-in-service benefit may be paid to the Member's estate.
Death-in-service
26 Where the death of a member occurs whilst he or she is in service, a lump sum gratuity of 4 times pensionable pay will be payable to his or her nominee.
Death in Deferment
27 Where a Service person has left the Armed Forces with a preserved pension, and subsequently dies before the pension comes into payment, this will be treated as a death in deferment. A gratuity equal to the preserved lump sum, uprated by pensions increases, will be payable to the nominee or otherwise.
Death within Five Years of Retirement
28 Subject to final decisions on the new taxation regime, where a death occurs within five years of the pension coming into payment, a lump sum payment equivalent to the balance of five years' worth of pension at its current rate less the lump sum received on retirement may be payable to the widow(er) or registered partner. For example, if a member died six months after a pension first came into payment, the widow(er) or registered partner might receive a lump sum equivalent to 1 1/2 years pension.
Dependant's Pension Benefits
Widows'/Widowers' Pensions
29 A widow/widower is the person to whom a member is legally married when he/she dies. A former wife or husband is not eligible to receive a widow/widower's pension. Registered unmarried partners are also eligible to receive a widow/widower's pension subject to the relationship being substantial at the time of death. These pensions are payable for life. This measure shall also apply to all existing non-attributable widows.
30 Death-in-service
Where a member dies in service, any eligible widow(er) or unmarried partner will receive a pension of up to 33.33 per cent. of the member's pensionable pay (equivalent to two-thirds of pension).This pension accrues over a period of up to 37/3 years (at an accrual rate of 1/112ths of pensionable pay for each year of service). Pensionable service is calculated as if the member had been invalided out of service at Tier 3 (pension enhanced by half
of member's remaining service, based up on the normal pension age of 55) or, if greater, uses the member's actual pensionable service up to 37/3 years. There is a minimum pension guarantee of 20 years' accrued pension.
31 Death-in-Retirement (or deferment)
Where a member dies in retirement or before a preserved pension becomes payable, any eligible widow(er) or unmarried partner will receive the pension of up to 33.33 per cent. of the members' pensionable pay (equivalent to two-thirds of pension). This pension also accrues of 37/3 years (using an accrual rate of 1/112ths of pensionable pay for each year of service).However, pensionable service is based on the member's actual service plus service brought in through AVCs.
Children's Pensions
32 In the event of the member's death children's pensions may be payable in respect of natural or adopted children and other children where the member was the legal guardian and the child was financially dependent on the member. This would include children who are born or become eligible after retirement.
33 Where a pension is payable to a spouse or unmarried partner, an only child will normally receive 25 per cent. of the member's pension entitlement; two or more eligible children will normally share equally 37.5 per cent. of the member's pension entitlement. Where no pension is payable to a spouse or unmarried partner, normally an amount equal to the member's pension entitlement will be divided equally among his or her eligible children, with no child receiving more than one third of the member's entitlement.
34 A child's pension may cease when the child reaches age 17. However, it may continue, or be restored, whilst the child is in full-time education. It may also continue if it is determined that the child is incapable of earning his or her own living due to a mental or bodily infirmity and where the condition was diagnosed before the child reached the age of 17. Decisions are at the discretion of the scheme administrator. Where a child is eligible for several AFPS children's pensions (for example from several parents) only the two pensions of highest value may be awarded.
Transfers in and out
35 This section will apply to members who leave service with a preserved pension, or have not accrued two years qualifying service (but see para 2.4), and to members who join or re-join the new AFPS after having accrued pension benefits in another pension arrangement. Pension credits arising from a pension share may not be transferred in or out.
Transfers in
36 A member who joins or re-joins the new AFPS with pension benefits in another pension arrangement may apply to have those benefits transferred to the new AFPS, provided that the member applies within 12 months of joining the scheme. Transfers-in will not be accepted where an individual is under notice of invaliding or of discharge in some other way.
37 An individual who elects to transfer pension rights from another pension arrangement into the new AFPS will be credited with reckonable service in the new AFPS in respect of those transferred pension rights, calculated using tables prepared by the Government Actuary's Department.
38 The transfer value tables will be applied to the transfer value to give periods of reckonable service for personal pension, lump sum and widow(er)'s/partners' benefits. The length of reckonable service credited may, however, be restricted where the limits imposed from time to time by the Inland Revenue for approved occupational pension schemes or under AFPS rules for maximum reckonable service would otherwise be exceeded.
39 Where a member has pension rights under the new AFPS that have been credited to another pension arrangement by means of a transfer value payment and those pension rights are subsequently transferred back into the new AFPS, that service will buy the benefits determined by the scheme actuary as equivalent to the transfer payment made to the AFPS. Precise arrangements for transfers-in will be the subject of detailed further work.
40 Where service credited within the AFPS is less than service served in the exporting scheme, the calendar length of the previous service will count for the purpose of the two-year qualifying period
for pension benefits. However, neither actual service in previous employment nor reckonable service credited in the AFPS will count towards the minimum period of service necessary for the award of Early Departure Payments or full pension.
Transfers Out
41 A member who ceases pensionable service or opts out of the new AFPS may elect to have his or her preserved pension rights transferred from the new AFPS to have another pension arrangement
(1) provided that the pension arrangement is approved for this purpose by the Inland Revenue;
(2) provided that it is prepared to accept the Transfer Value payment.
42 Application must be made before the member's 64th birthday, or within six months of the termination of a pensionable commitment, whichever is the later. Pensions in payment may not be transferred. Transfer Values for those leaving the new AFPS will normally be calculated using tables prepared by the Government Actuary's Department, the age at the time of the transfer value calculation and the value of the preserved pension credits as at that date.
AVCs
Additional Voluntary Contributions
43 AVCs can be used to top up AFPS benefits where the person's overall pension benefits are unlikely to exceed Inland Revenue limits.
44 The legislation on additional voluntary pension contributions, governing the requirements to provide and the scope to purchase, should be considered revised during the next year. In the light of those emerging proposals it will be decided what arrangements would be most appropriate for the new AFPS.
Pensions Increases
45 All pensions and lump sums awarded under the pension Scheme will be eligible to be increased by analogy with the terms set out in the 1971 Pensions (Increase) Act and appropriate Pensions Increase Orders.
General Provisions
Payment of pensions
46 Pensions will become payable on retirement from the Armed Forces at or after the normal pension age of 55, at any age on ill-health retirement under Tiers 2 and 3 (see section 4) or at age 65 for preserved pensions.
Diversion of pension
47 Pension benefits payable under the new AFPS may not be assigned to a third party, except where a court is making an order for financial provision in divorce proceedings. There are also general prohibitions on assignment for occupational pensions in section 91 of the Pensions Act 1995 and, in respect of Guaranteed Minimum Payment rights (which will continue), in section 159 of the Pension Schemes Act 1993.
48 If a member is unable to manage his or her affairs by reason of mental disorder, the Secretary of State may divert part, or all, of his or her pension to another person or institution for his or her care and maintenance and for the benefit of his or her dependants.
Forfeiture, Suspension or Withholding of Service Pension
49 At the discretion of the Defence Council, a member may forfeit their Service pension in the following circumstances:
(1) Conviction of one or more offences which are:
(a) Offences of treason;
(b) Offences under the Official Secrets Act 1911 to 1989 for which they have been sentenced to a term of imprisonment of at least 10 years or to two or more consecutive terms amounting in the aggregate to at least 10 years.
(2) Conviction of an offence committed in connection with their service as a member of the Armed Forces, including any which the Secretary of State for Defence considers to have been gravely injurious to the defence, security or other interests of the State.
50 In exceptional circumstances, a payment not exceeding the amount of the Service Pension forfeited or suspended may be made by the Defence Council to, or for the benefit of, the spouse or other dependants of the member.
51 At the discretion of the Defence Council, pension benefits may be withheld from a widow(er) or unmarried partner, or if already in payment may be forfeited, if the member's widow(er) or unmarried partner is convicted of the murder, manslaughter or unlawful killing of that member.
Internal Dispute Resolution Procedures
52 Complaints against decisions made by the administrators of the new AFPS may be made under the scheme's Internal Dispute Resolution Procedures (IDRP).
53 Those eligible to complain under these procedures are:
(1) Serving members of the new AFPS;
(2) Members of the scheme who have left the Service;
(3) Dependants of deceased members of the scheme;
(4) Potential members of the scheme;
(5) A former spouse with pension credit rights from a pension share;
(6) Anyone claiming to be in any of the foregoing categories.
54 There will be two stages to the IDRP. Under the first stage, members of the scheme have the right to complain about a decision made by the scheme administrators. Complaints under this stage will be considered by the appropriate office within the Armed Forces Pay and Administration Agency.
55 Under the second stage, members of the scheme have the right to appeal to the scheme managers against the decision made on their complaint under the first stage. Complaints under this stage will be considered by the managers of the AFPS.
56 The details of the IDRP will be contained in Defence Council Instructions and pension scheme booklets.'.