Preserved Pension question

[babygravy]

Bit confused (as usual), post Tx I got a 'summary' of my pension of 9 years of service.

It said for service up to 5/4/06 that £600 will be paid at 60, and for service 6/4/06 onwards £3k would be paid at 65.

My questions hopefully someone can answer:

1) Why is it split into a pre/post 2006 tax year with different ages? All I can think is they bumped me over to AFPS05 even though I specifically told them to keep me on AFPS75.
2) I've rounded off the amounts, but is that the actual complete pension pot, or is that like £3k per year? I roughly estimated that 9/22s of a full POs pension might be £3k.
3) Is there a terminal grant at 60/65 that is 3 times the pension?

Thanks,

Any help much appreciated

 

[cjg375]

The pension rules changed in 2006 so even if you stayed on AFPS75 preserved pension rights are paid 5 years later. I think it was a legislation change which meant the very earliest any pension benefit could be paid was 65. It's one of the reasons AFPS05 had Early Departure Payments and not Pension Payments.

Not sure on the two figures.

Don't think you'll get a terminal grant but standing by to be contradicted.


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[vauxhall]

Bit confused (as usual), post Tx I got a 'summary' of my pension of 9 years of service.

It said for service up to 5/4/06 that £600 will be paid at 60, and for service 6/4/06 onwards £3k would be paid at 65.

My questions hopefully someone can answer:

1) Why is it split into a pre/post 2006 tax year with different ages? All I can think is they bumped me over to AFPS05 even though I specifically told them to keep me on AFPS75.
2) I've rounded off the amounts, but is that the actual complete pension pot, or is that like £3k per year? I roughly estimated that 9/22s of a full POs pension might be £3k.
3) Is there a terminal grant at 60/65 that is 3 times the pension?

Thanks,

Any help much appreciated

1. The preserved pension age changed on 6 April 2006 for AFPS 75 members.

2. The amounts they have told you are payable at 60 and 65 are the actual pension rather than the pension pot. To work out what the preserved pension should be you take the 37 yr rate (PO = £16,243), take 2.75% of that (£447.78) and multiply by your length of service (9 x £447.78 = £4,030.04). These figures are from the 2013/14 pension code. This is then divided between pension earned up to 5 April 2006 and pension earned after that date.

You mention that you will get £600-ish at 60 and £3K- ish from 65, so, effectively, your pension would go up to £3,600-ish at 65. These figures will be increased by CPI to take account of inflation between your departure date and the dates at which the pension is payable. If you left in 2013/14 and are a PO you need to check that your pension summary is correct as £3,600-ish is shy of what I make it. Either go on to the pension calculator or, if you are a member, ask us to do it for you (Forces Pension Society - Fighting for the Forces and their Families).

Just for completeness, when the preserved pension age was changed to 65, a new rule was introduced to allow the pension payable at 65 to be claimed from age 60 with actuarial reduction.

3. Yes there is a lump sum at 60 and 65. In each case it is three times pension.

 

[babygravy]

Hello,

Thanks for the answers

I tried the online pension calculator, but it didn't like me putting in a termination date that was in the past rather than future, so couldn't use it!

I'm still a bit confused by certain bits:

1) So the bit of pension at 60 (£600), adds on top of the £3k at 65? (to give an effective pension of £3.6k)
2) How would/should the value you calculated (£4,030.04) be split between the pre and post 2006 change they made?

Thanks again,

bg

 

[vauxhall]

1. Yes

2. When did you join (or when was your 18th birthday, if that was after you joined) and when did you leave?

 

[silverfox]

I don't mean to hijack the thread, but whilst there is a pension specialist on the net I am loathe to cahnge ccts. My question is about the taxing of pensions.

I have just left and now recieve my pension (AFPS 75). I also have a new job but can't seem to work out who should be holding my Tax Code. My Payroll company say it is probably the pension payers, but I have heard nothing from them. I have my P45 and would dearly love to know who to send it to..

 

[scouse]

Your pension provider holds you tax code number, and deducts tax accordingly.....ps. You will always note that the provider, states that any tax code query You contact HMRC, and not them. Lol that's the situation when you are receiving a pension/ pensions and not working....Working and receiving a pension is a bit more complicated. HM Revenue & Customs: If you have more than one tax code hope that helps!!!!

 

[babygravy]

1. Yes

2. When did you join (or when was your 18th birthday, if that was after you joined) and when did you leave?

I joined end of Oct 2004, left end of April 2013. I actually did exactly 8½ years to the day (don't know why I though it was 9 =-\\\\\\\\)
No boys time as I was well into my twenties when joining. Leaving rate was PO on AFPS75.

Cheers

bg

 

[vauxhall]

I don't mean to hijack the thread, but whilst there is a pension specialist on the net I am loathe to cahnge ccts. My question is about the taxing of pensions.

I have just left and now recieve my pension (AFPS 75). I also have a new job but can't seem to work out who should be holding my Tax Code. My Payroll company say it is probably the pension payers, but I have heard nothing from them. I have my P45 and would dearly love to know who to send it to..

The Pensions people will assume it is on your pension and the employer will assume it is on your pay. You can only have one tax free allowance and must decide where to put it. If you have just pay and pension, it can go on either. I am told by one of the financial advisors who does FARs with me that, if you have other income (stocks, shares, rental income etc) it is best to put it on your pay. Whatever you decide, tell the one who isn't taking it into account not to allow for it.

 

[vauxhall]

I joined end of Oct 2004, left end of April 2013. I actually did exactly 8½ years to the day (don't know why I though it was 9 =-\\\\\\\\)
No boys time as I was well into my twenties when joining. Leaving rate was PO on AFPS75.

Cheers

bg

Ok, let's try again. end of Oct to end of Apr is .4684 of a year - so you have 8.4684 yrs service (this assumes that you didn't have any unpaid service). We worked out earlier that 2.75% of the PO's 37 yr rate was £447.78 so, according to my calculations, the pension is just over £3,790. You said that you had some some roundings. Does that account for the £190? If not, and all your service was paid service, join the Forces Pension Society and one of my colleagues (David Marsh or Anthony Henderson) will look into this for you.

 

[vauxhall]

I have had another think about why your pension should be less than I have worked out and it has just come to me. There were two pension codes issued in 2013/14. One when the pay rise came in on 1 April and another on 1 May when the xFactor increase came in. You left before the 1 May and the pension codes I have are the one issued on 1 May. I don't have the old ones but I suspect that if I used them, the difference in the calculations would disappear.

 

[babygravy]

Ok, let's try again. end of Oct to end of Apr is .4684 of a year - so you have 8.4684 yrs service (this assumes that you didn't have any unpaid service). We worked out earlier that 2.75% of the PO's 37 yr rate was £447.78 so, according to my calculations, the pension is just over £3,790. You said that you had some some roundings. Does that account for the £190? If not, and all your service was paid service, join the Forces Pension Society and one of my colleagues (David Marsh or Anthony Henderson) will look into this for you.

I added the two pension amounts together, and they total about £3780, so that is pretty much equals the calculation you made above.

There certainly seems a lot to take into account when trying to calculate pensions!

Thanks again

bg

 

[vauxhall]

I added the two pension amounts together, and they total about £3780, so that is pretty much equals the calculation you made above.

There certainly seems a lot to take into account when trying to calculate pensions!

Thanks again

bg

There is a lot to take into account and I cannot urge people enough to attend a FAR Briefing as part of their resettlement programme.

The Forces Pension Society (Forces Pension Society - Fighting for the Forces and their Families) deliver the first part of the briefing and cover service and state pensions, tax, national insurance, commutation, death. A financial adviser then takes over to talk about everything else with a pound sign in front of it.

These briefings are held all over the place and the full programme should be available from the Resettlement Office.