MONEY
On 16 Oct 12, the Defence Secretary announced the Final Scheme Agreement of the new AFPS. In recognition of the Armed Forces’ unique commitment, the Government has agreed to a new pension scheme which, while less valuable than the current schemes, remains amongst the best pension schemes anywhere in the public or private sectors. The new AFPS will have an Early Departure Payment (EDP) point at 20/40 (20-years service and over the age of 40) and a Normal Pension Age (NPA) of 60.
The RAF is currently considering the impact of these decisions on current engagements and will soon be able to advise of any proposed changes to terms of service to allow personnel to serve to the revised EDP or NPA points. A copy of the Final Scheme Agreement can be accessed via the Internet (see further information below). Much work was undertaken to provide the best possible outcome, given financial constraints, for Service personnel and I hope that those of you who have taken the time to read the Final Scheme Agreement will be reassured by the benefits offered by the new AFPS.
Further details including a Final Scheme Design glossy booklet and a new DVD will be produced in due course and a new pension calculator is currently planned for delivery in 2013. In terms of an independent assessment, David Marsh of the Forces Pensions Society states2
“I believe it is probably the best proposal out of all the public sector scheme choices in terms of a complete package. It is easy for the cynic to cherry-pick the worst of everything (that is what the press love to do to create sensational stories to sell newspapers), but in overall terms I am 100% sure that the scheme on offer is as good as the Armed Forces could have hoped for – and the biggest coup of all, was gaining the Treasury’s approval not to insist that members of the Armed Forces make personal contributions from salary towards their pension entitlement, at a time when all other members of the public sector were having the level of their direct contributions from salary increased!”
ALLOWANCES
The recent changes to allowances were a direct result of the SDSR which set out a requirement to reduce expenditure on Service and Civil Service allowances in order to reduce the significant deficit within the MoD’s Budget. The SDSR review sought a saving of £250M out of a total annual budget
www.raf-ff.org.uk
of £880M, a considerable sum! Some of the savings could be achieved through the concomitant reduction in Service manpower numbers, but not all and consequently, there was a need to review the purpose of each allowance. Furthermore, in determining which allowances needed to be amended, reduced or cut, the Centre, MoD and single Service pay and allowances staff had to estimate what effect the changes would have on personnel and their families.
In delivering the savings it was determined that, where possible, if someone expended any money in pursuit of their duty, they should be able to claim this money back; however, in some cases the amount claimed back may have been altered to a contribution towards the costs rather than the full amount. There were also some allowances (eg. those compensatory allowances mentioned above that are owned and set by the AFPRB) that could not be altered in the Review.
In addition, it was decided that those allowances that were paid to those personnel on operations, such as Operational Allowance, would be protected. As a result, we were fishing in a small pond and unfortunately all personnel were affected in some way or another by the need to save almost 30% of the allowances budget. That is why some very painful measures had to be taken.
Since the SDSR, considerable work was undertaken to evaluate the impact of the changes and direct feedback from Service personnel and their families gave us the evidence to mitigate one of the more extreme measures. It was agreed that the personal contribution for Home To Duty Travel should be capped at 3 miles and not raised to the SDSR proposed 9 mile
contribution. This change required the Services to make savings from other areas to compensate for the additional £20M required. Other recent small improvements have seen increases in Local Overseas Allowance and Get You Home Overseas flights in some locations and we are continuing to work extremely hard to see what other quick wins can be achieved by rebalancing the existing budget.
Remuneration – Further Information: • Office of Manpower Economics Armed Forces Pay Review Reports:
www.ome.uk.com/ AFPRB_Reports.aspx
• RAF Community Support Financial Advice:
www.raf.mod.uk/community/financial/
• Pay and Allowances:
www.raf-families-federation.org.uk/ financial-payandallowances.asp
• Armed Forces Covenant:
www.raf.mod.uk/community/news/ armedforcescovenant.cfm
• Future Armed Forces Pension Scheme:
www.mod.uk/DefenceInternet/ AboutDefence/WhatWeDo/Personnel/ Pensions/FindOutAboutTheFuture
ArmedForcesPensionScheme.htm
• Existing Armed Forces Pension Schemes:
webarchive.nationalarchives.gov. uk/+/
http://www.mod.uk:80/ DefenceInternet/AboutDefence/ WhatWeDo/Personnel/Pensions/ ArmedForcesPensions/
• Forces Pension Society:
www.forcespensionsociety.org/
NOTES
1 In 2012 the AFPRB visited RAF Brize Norton, RAF Coningsby, RAF High Wycombe, RAF Leeming, RAF Marham and RAF Wittering as well as RAF Personnel in Afghanistan, the Middle East and the South Atlantic Islands. 2 Forces Pension Society Website “New Armed Forces Pension Scheme: How good is it and how will it work.”
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