THE ARMED Forces Pension Scheme (AFPS) is a Government-funded defined benefit scheme. Unlike other workplace pensions, service personnel do not contribute financially from their salary; their selfless commitment and service are recognised as their contribution.
In return, the scheme provides guaranteed pension benefits and financial protection for eligible family members. Benefits are generally based on salary and length of service, providing financial security throughout retirement.
Key benefits
A key feature of the AFPS is the provision of death and survivor benefits. Eligible dependants may receive support if a service person dies while serving, after leaving the Armed Forces, or whilst receiving their pension. Depending on the pension scheme and individual circumstances, this support can include a lump-sum payment and an ongoing survivor’s pension.
For civilian partners, it is important to understand that entitlement is not always automatic. Under AFPS 05 and AFPS 15, benefits can be payable to a spouse, civil partner or an eligible unmarried partner.
An eligible partner is generally someone who was in a financially dependent or interdependent long-term relationship with the service person and meets the scheme’s criteria.
Keep admin in order
Service personnel are encouraged to complete or update their beneficiary nomination forms. While not mandatory, it is strongly recommended for AFPS 05 and AFPS 15 members. A valid nomination ensures any tax-free lump sum is paid to their chosen beneficiary; otherwise, Veterans UK will normally pay it to an eligible dependant or, if none exists, to the estate.
In the event of a death, the surviving partner should contact Veterans UK or the Armed Forces Pension Scheme team as soon as possible. The member’s service number, date of birth, National Insurance number and details of the dependant will usually be required to assess eligibility and begin any claim.
Tax questions
Another common question concerns tax. Death benefit lump sums under AFPS 05 and AFPS 15 are generally paid tax-free to the beneficiary or nominee, and retirement lump sums are also generally tax-free within HMRC limits.
AFPS 05 provides an automatic tax-free lump sum, and AFPS 15 allows members to commute part of their pension for a tax-free lump sum.
Tax treatment can vary depending on the type of benefit and individual circumstances, so beneficiaries should seek guidance if they are unsure.
Rob Morris, Head of Pensions at the Forces Pension Society, emphasises the importance of understanding pensions as part of long-term financial planning: “The Armed Forces Pension Scheme offers valuable benefits that can support service personnel and their families throughout life.
“Reviewing your pension arrangements is an important part of securing your family’s financial future. If you need guidance or have any questions, the Forces Pension Society is here to help.”
Membership of the Forces Pension Society costs £47 a year.
forcespensionsociety.org
Veterans UK administers the AFPS.
Contact 0800 085 3600/ (overseas): 00 44 141 224 3600
Email: dbs-pensionshelp@dbspv.mod.uk