This is called a Guaranteed Minimum Pension (GMP). Don’t include personal or financial information like your National Insurance number or credit card details. The system is becoming simpler for younger service personnel because from 6th April 2016 there will no longer be any difference between the National Insurance rates payable – every employee will pay National Insurance at the higher Contracted In rate, no matter what type of pension scheme they have. Welcome to the Armed Forces Pension Calculator. The GMP element is recognised on your State Retirement pension award letter and it is described by the rather confusing term “Contracted Out Deductions” (COD). 2. Use the calculator to work out how much armed forces pension you may get. A minimum of two years’ service is needed in the scheme in order to be entitled to any pension. However, it is possible that your pension will not be affected by the National Insurance Adjustment because it ceased on 6th April 1980. We’ll send you a link to a feedback form. Armed Forces Pension in payment prior to Inflation increase: Less National Insurance Adjustment of 5 years’ worth: Less Contracted Out Deductions figure of £32.15 per week: Plus Contract Out Deductions figure of £32.15 per week: New annual pension figure for next financial year: If You Read One Book This Year Make It This One – Jay Morton’s Soldier, BFBS Launches Digital Map Of Conflicts To Mark Remembrance Day. Nevertheless, there is a second form of adjustment made to your Armed Forces pension that could occur when your State Retirement pension kicks in; this is known as the Guaranteed Minimum Pension (GMP) adjustment, and this will affect anybody with an Armed Forces pension from service given prior to 6th April 1997. This abatement is known as a “National Insurance Adjustment” and is applied to your Armed Forces pension from the point you reach your state pension age; it does not matter whether you elect to take your State Retirement pension at the earliest opportunity or defer it to a later date, this National Insurance Adjustment is applied at your state pension age regardless. If you joined before January 1, 2006, you remained in the legacy retirement system. I’m not going to add that into a worked example here because it is complicated and there is not enough space on the page! Jingle Comms Is Back For 2020! It will take only 2 minutes to fill in. That is to say, all members of the Armed Forces will be paying a rate of National Insurance Contributions that is 1.4% of your salary greater than the current rate you pay, but remember it will be giving you credits towards the new higher single tier pension of around £151 per week that comes into effect for those retiring from 6th April 2016 onwards, instead of the current £116 basic state pension, which is all the Contracted Out National Insurance Contributions buy you. If you joined the service on or after January 1, 2018, you were automatically enrolled in the BRS. If you have questions about your Armed Forces Pension and you are a member of the Forces Pension Society, you can call the Society’s dedicated help line on 020 7735 0110 or find answers on its web site. You’ve accepted all cookies. The whole mechanics surrounding this issue are not the easiest to understand, but knowing about it now will make it easier to understand and digest when it happens. You can change your cookie settings at any time. * There are three main pension schemes: 1. There is a link between the amount of pension you are paid from your Armed Forces occupational pension and the award of your State Retirement pension which nobody seems to know anything about – that is, until their State Retirement pension comes into payment, and then it comes as a shock. The CPI rate used is the CPI headline rate for the September prior to the April adjustment the following year. Claim at age 60 for benefits earned up to and including 5 April 2006, and age 65 for earnings after that date. You can also download and fill in a pension forecast request (form 12). We use cookies to collect information about how you use GOV.UK. Employers were allowed to declare whether their company pension scheme was to be deemed a Contracted In scheme or a Contracted Out scheme; the benefit of a Contracted Out scheme is that the company pension scheme fund receives an annual ‘rebate’ from the Government as a reward for taking all of its pension scheme members out of the new additional state pension scheme – SERPS. If you are not yet a member, the cost is modest and benefits (in addition to the best available expert advice) include discounts on a range of useful products and services and the assurance that a dedicated organisation, independent of the Government, is there to help you get the most from your Armed Forces pension. The difference between Contracting In and Contracting Out for the individual pension scheme member is that as a member of a Contracted Out pension scheme you pay a rate of National Insurance Contributions that is 1.4% lower than would otherwise be the case. Non-commissioned individuals can leave with immediate pension award … The CPI increase which will come into force next April has been announced as 0.5%. Paid service after age 18 counts towards pension (21 for officers). This rate is formally announced in October. However, unlike the National Insurance Adjustment, the GMP adjustment only occurs when your State Retirement pension comes into payment; if that happens to be your state pension age then it will be effective from that point, but if you defer the drawing of your State Retirement pension then it does not take effect until the date that pension is put into payment. David Marsh, Pensions Secretary of the Forces Pension Society (FPS) explains…. The Pension Calculator is for guidance purposes only. What the employer had to promise before the Government would allow a company scheme to be declared a Contracted Out scheme was that its pension scheme would pay a pension of at least the value of the SERPS additional state pension an individual would have earned had they been in the SERPS system. Once you have retired and all the while you are receiving your Armed Forces pension and not your State Retirement pension, the whole of your Armed Forces pension is increased annually by the relevant inflation uplift applicable each April. Therefore, this aspect of the relationship between Armed Forces and State Retirement pensions will affect only those who have more than 35 years’ reckonable service today, and it will only be the additional portion of reckonable service over 35 years that will attract any adjustment when you reach your state retirement age. This abatement is known as a “National Insurance Adjustment” and is applied to your Armed Forces pension from the point you reach your state pension age; it does not matter whether you elect to take your State Retirement pension at the earliest opportunity or defer it to a later date, this National Insurance Adjustment is applied at your state pension age regardless. Below is an example of how an annual increase would be calculated with an inflation uplift of 2% for an individual who has a reasonable amount of service prior to 1997: There is another little quirk in this calculation that throws a spanner in the works too, and that is that all GMP earned from 6th April 1988 has its annual increase capped at 3% so either the full inflation uplift or 3%, whichever is the smaller, is applied to that portion of your pension. NE8 3AH, Designed by Elegant Themes | Powered by WordPress. For all defined benefits pension schemes (that is final salary or career averaging schemes such as those of the Armed Forces) the employer had no difficulty in achieving this criteria and so every defined benefits pension scheme was Contracted Out. All content is available under the Open Government Licence v3.0, except where otherwise stated, National restrictions in England from 5 November, preserved pension forecast form (form 14), Claim if you were injured while serving in the armed forces, Coronavirus (COVID-19): guidance and support, Transparency and freedom of information releases. Festive Messages For Our Forces. For more information, go towww.ForcesPensionSociety.org, Editor: Mal Robinson t: 0191 442 0198e: MRobinson@balticpublications.co.ukGear House, Saltmeadows Road, Gateshead, Tyne & Wear. Commissioned Officers can leave with immediate pension award entitlements after 16 years of service. However, once your State Retirement pension comes into payment, it automatically assumes responsibility for applying the increase to the GMP figure as part and parcel of your State Retirement pension, and so the GMP element of your Armed Forces Pension is no longer increased on an annual basis. You may be eligible for an armed forces pension if you’re a current or former member of the armed forces.