New clause 19 - Full career pension

Part of Armed Forces (Pensions and Compensation) Bill – in a Public Bill Committee at 10:15 am on 26th February 2004.

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Photo of Gerald Howarth Gerald Howarth Shadow Minister (Defence) 10:15 am, 26th February 2004

I beg to move, That the clause be read a Second time.

We discussed full career pensions at length during our first sitting, and I do not intend to repeat too much of what I said then. The argument was advanced forcefully.

The new clause would increase the full career pension to the public sector benchmark of 662/3 per cent., which is the maximum permitted by the Inland Revenue. The new armed forces pension scheme is the only public sector final salary scheme that will prevent its members from earning a full two-thirds of final salary pension, even if they serve the usual full career of 35 years. That is structurally unsound, and fails to recognise the servicemen's unique commitment. The employer imposes a 35-year maximum on a career because they require a younger-than-usual work force. It is an employer benefit, not a perk of the job. The effect is that after 35 years of service, the 50 per cent. pension with the lump sum added in cannot be higher than 621/2 per cent., compared with the 662/3 per cent. that is the norm in all other pension schemes in the public and private sectors. The Minister wants to make an exception the other way. All other public policy is to have a final salary of 662/3 per cent. In this case, however, it will be 621/2 per cent. So this has no ramifications, we have to understand, for the wider public sector.