Medical discharge under AFPS 15 updated

Discussion in 'Finance & Pensions' started by gerrysurfs, Sep 17, 2014.

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  1. Evening all,

    As promised, I've outlined briefly below the details of being medically discharged under AFPS 15.
    I've only covered that which I think is relevant and have also only covered tier 1 discharge criteria, as I'm led to believe the majority of personnel made P8 are discharged as a tier 1.

    The following is taken from din: 2014DIN01-178

    AFPS15 will be introduced from 1st April 2015. Service personnel who were within 10 years of their AFPS pension scheme normal pension age on 1st April 2012 will not transfer into the new scheme and will continue to be eligible for ill-health and dependants' benefits in accordance with their existing scheme rules. All other members of a current AFPS will be automatically transferred into the new scheme on 1st April 2015.

    For those who transfer into AFPS 15, ill-health and dependants awards will be calculated proportionately, based on time served within AFPS 15 and time served within any legacy scheme.

    Personnel in the process of being medically discharged on or after 1st April 15 will be treated as remaining wholly in their current legacy pension scheme, provided their medical discharge has been authorised by the appropriate service medical board authority on or before 31st March 2015.

    AFPS 15 tier 1 award: A tax free lump sum (or if qualified, an EDP, whichever sum is greater) and a deferred pension. The lump sum is calculated as follows:

    Final pensionable earnings Divided by 8 X No of years in service in the AFPS 15 scheme
    (Final pensionable earnings is broadly equivalent to a years basic pay - the best 365 consecutive days in the last 3 years).

    If the individual has service in both AFPS 15 scheme and a legacy scheme, the individual will then also receive;

    A tier 1 award (or EDP or service invaliding pension) based on time spent in any legacy scheme, calculated as per legacy scheme rules.

    Any tier 1 award is subject to a six month minimum and 24 month maximum limit in relation to final pensionable earnings (FPE). The award is capped at 24 months. Conversely, if the Tier 1 calculation yields an award that would be less than six months FPE, it will be rounded up to be equal to 6 months.

    If an individual is discharged before reaching the AFPS 15 EDP point, they will receive the tier 1 lump sum (plus any award from legacy schemes) plus they will receive their AFPS 15 deferred pension, paid at their state pension age.

    Example of a Tier 1 award calculation for a regular with service in both AFPS 15 and AFPS 05

    In accordance with the rules of AFPS 15, an OR-4 is assessed by a registered medical practitioner to be unfit for service in the armed forces because of physical or mental impairment.
    He is deemed to have no significant impairment to his future prospects of employment and so is entitled to tier 1 ill health benefits.

    He has service in both AFPS 05 and AFPS 15 and so his ill-health benefits will be paid from each scheme in proportion to the length of service in each scheme.

    This member has not reached either of the AFPS 05 or AFPS 15 EDP points and so his Tier 1 ill health benefits from both schemes will take the form of a lump sum payable immediately. He will also retain his entitlement to a deferred pension from both schemes at the relevant deferred pension ages.

    He has 9 years pensionable service in total including 6 years in AFPS 05 up to the point of transfer to the new scheme, and 3 years within AFPS 15. His final pension pay is £28,000 per annum. His tier 1 ill health lump sum, based on his service in AFPS 05 would be calculated as follows:

    Final pensionable earnings divided by 8 X No of years in the scheme.

    Therefore his AFPS 05 award is £28,000 divided by 8 X 6 years = £21,000.

    He additionally has a tier 1 ill health lump sum based on his 3 years of pensionable service under AFPS 15, which would be calculated as follows:

    £28,000 divided by 8 X 3 years = £10,500

    Additionally both these lump sums will be subject to minimum and maximum limits. The minimum limit for both AFPS 05 and AFPS 15 tier 1 ill-health lump sums is 6 months pensionable earnings and the maximum is 2 years pensionable earnings. However, these limits will be proportioned according to the proportion of total service spent the relevant scheme.

    For the AFPS 05 element, the minimum limit for the tier 1 ill health lump sum would be:

    6 months pay (£14,000) X AFPS 05 service (6 years), divided by total service (9 years). = £9,333

    For the AFPS 05 element, the maximum limit for the tier 1 ill health lump sum would be:

    2 years pay (£56,000) X AFPS 05 service (6 years), divided by total service (9 years) = £37,333

    For the AFPS 15 element, the minimum limit for the tier 1 ill health lump sum would be:

    6 months pay (£14,000) X AFPS 15 service (3 years), divided by total service (9 years) = £4,667

    For the AFPS 15 element, the maximum limit for the tier 1 ill health lump sum would be:

    2 years pay (£56,000) X AFPS 15 service (3 years), divided by total service (9 years) = £18,667

    Both lump sums calculated above lie within the relevant minimum and maximum limits for each scheme and so would not need to be amended.

    Therefore the total immediate lump sum payable to this member on ill health retirement is £21,000 + £10,500 = £31,500.

    I know it's long winded (believe me, it was longer writing it!!) but hopefully the information will be of use to some of you.

  2. Hi Gerry,
    What if I am on AFPS 75 and get medically discharged next year but it is not agreed by med board until after 31st March 2015.
  3. Bomber,

    As far as I know, you'll get a payout and resettlement as per the afps 75 scheme, plus any additional benefits under the afps 15 scheme, depending on additional time served after 1st April 2015 (payment will be a minimum 6 months, regardless of whether you've served an additional 6 months or not).

    This is only my interpretation of the scheme as per the DIN. If you haven't done so already, get yourself booked onto an nmbos brief and the guy running it can give you a personal breakdown of entitlements if made P8. Don't know where you're based, but there's one at Drake on 11th December.

    Hope this helps
  4. Cheers for the reply. I'm based in the West Midlands. Presumably any medical pension I would get would be paid at state pension age and not immediately as on AFPS 75.
  5. AFPS 75 ill health pension comes into payment as soon as you are invalided.

    The AFPS 15 benefits will depend upon the Tier your condition is put in.

    For Tier 1 you will get a lump sum from a scheme other than the pension scheme but your AFPS 15 pension benefits will be preserved until your state pension age.

    For Tier 2 and 3 the pension is paid as soon as you are invalided.

    If you are a Forces Pension Society member email [email protected] and David or Anthony will help you with figures. If you are not a member, visit our website and see what we offer.
  6. I'd be a tier 1. Wonder what the chances are of getting through the med board process before April next year.
    I'll have a look into it.

    Thanks for your help.
  7. Bomber you've got no chance unfortunately mate. People being referred now are looking at July boarding at the earliest
  8. Bomber 1, you need not be boarded before April to get the AFPS75 part of your benefits paid immediately on discharge. Your current benefits are protected. It is just the AFPS 15 benefits in respect of your service after 1 April 15 that you will have to wait for.

    If you need help understanding this change, remember our website.

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