Select Committee on Defence Minutes of Evidence


Annex F

COMPARISON BETWEEN CURRENT ARMED FORCES ATTRIBUTABLE BENEFITS AND PROPOSED JOINT COMPENSATION SCHEME

  Attached examples set out a comparison of the benefits available on death or injury in the armed forces under:

    a)  Existing benefits—paid through a combination of the attributable benefits of the Armed Forces Pension Scheme and the War Pension Scheme.

    b)  Proposed benefits—as set out under the Joint Compensation Review Consultation document dated March 2001.

  The examples chosen are intended to illustrate the main features of the Review proposals. They cannot cover every aspect of the proposals.

  The examples provided are:

1.Death in service a)no children, lower pay spine level
b)no children, upper pay spine level
c)two children
2.Injury claim emerging after retirement Tariff 8—eg significant mental condition
3.Injury leading to discharge from services Tariff 13—eg fracture long bone in lower limb
4.Injury not leading to dischargeTariff 13—eg internal derangement of the knee
5.Injury claim emerging after retirement Does not satisfy new scheme criteria


  Note that where, under the "proposed arrangements", benefits are payable from the Armed Forces Pension Scheme (AFPS) the benefits quoted are based on our proposals for the new AFPS. Some members of the Armed Forces can be expected not to transfer to the new pension scheme and the calculations affecting them will be different. Transitional arrangements will be developed to cover such cases.

EXAMPLE 1a

ATTRIBUTABLE DEATH IN SERVICE

  Member—Captain, 6 years service, age 30 at death, pay level 3, salary £30,372

  Spouse —Yes —Age under 40

  Children—No

   
Existing
Arrangements
Proposed
Arrangements
Pension Scheme Benefit
P1) Lump sum benefit
£34,924
£91,116
P2) Pension to spouse pa
£2,854
£4,013
Attributable benefits/Compensation scheme
A1) Lump sum award
£17,462
Nil
A2) Bereavement allowance
Nil
£20,000
A3) Pension to spouse pa
£11,782
£11,952
War Pension
W1) Spouse's pension pa (Lower rate)
£1,135
Nil
DWP Benefits
D1) Bereavement payment (one-off)
D2) Widowed Parents Allowance pa
D3) Bereavement Allowance
Nil
Nil
Nil
£2,000
Nil
Nil
D4) State pension from age 65 pa (Category A)
£3,770
£3,770
Lifetime value
Capitalised value of the above benefits (to nearest £1,000)
£426,000
£509,000


ATTRIBUTABLE DEATH IN SERVICE

  Member—Captain, six years service, age 30 at death, pay level 7, salary £33,488

  Spouse —Yes —Age under 40

  Children—No

  
Existing
Arrangements
Proposed
Arrangements
Pension Scheme Benefit
P1) Lump sum benefit
£34,924
£100,464
P2) Pension to spouse pa
£2,854
£4,425
Attributable benefits/Compensation scheme
A1) Lump sum award
£17,462
Nil
A2) Bereavement allowance
Nil
£20,000
A3) Pension to spouse pa
£11,782
£13,181
War Pension
W1) Spouse's pension pa (Lower rate)
£1,135
Nil
DWP Benefits
D1) Bereavement payment (one-off)
D2) Widowed Parents Allowance pa
D3) Bereavement Allowance
Nil
Nil
Nil
£2,000
Nil
Nil
D4) State pension from age 65 pa (Category A)
£3,770
£3,770
Lifetime value
Capitalised value of the above benefits (to nearest £1,000)
£426,000
£558,000

ATTRIBUTABLE DEATH IN SERVICE

  Member—Captain, six years service, age 30 at death, pay level 3, salary £30,372

  Spouse —Yes—Age under 40

  Children—Yes—2

  
Existing
Arrangements
Proposed
Arrangements
Pension Scheme Benefit
P1) Lump sum benefit
£34,924
£91,116
P2) Pension to spouse pa
£2,854
£4,013
P3) Pension to children pa (each £1,427)
£2,854
£2,858
Attributable benefits/Compensation scheme
A1) Lump sum award
£17,462
Nil
A2) Bereavement allowance
Nil
£20,000
A3) Pension to spouse pa
£11,782
£11,952
A4) Pension to children pa (each £2,063)
£4,126
£4,688
War Pension
W1) Spouse's pension pa (Higher rate)
£4,720
Nil
W2) Pension to children pa 1st Child £746
2nd Child £832
£1,578
Nil
DWP Benefits
D1) Bereavement payment (one-off)
D2) Widowed Parents Allowance pa
D3) Bereavement Allowance
Nil
Nil
Nil
£2,000
£4,865
Nil
D4) State pension from age 65 pa (Category A)
£3,770
£3,770
D5) Pension to children pa
Nil
Nil
Lifetime value
Capitalised value of the above benefits (to nearest £1,000)
£524,000
£610,000

ATTRIBUTABLE INJURY CLAIM EMERGING WITHIN THREE YEARS OF RETIREMENT

  Member—Other Rank, age 53 at claim, retired at age 50, service at retirement 29 years, salary at retirement £25,298.15

  Injury—significant mental condition—40 per cent disability level under existing arrangement;

—Tariff level 8 in proposed scheme.

PENSION IN PAYMENT £10,021

 

  
Existing
Arrangements
Proposed
Arrangements
Triple A payment
£25,000
Guaranteed Income Stream pa
£6,480
War Pension pa
£2,492
Capitalised value of the above benefits (to nearest £1,000)
£39,000
£127,000


ATTRIBUTABLE INJURY LEADING TO DISCHARGE

Member

  Member—Staff Sergeant, 10 years service, age 30 at injury, salary £25,298.15

  Injury—fracture long bone: —20 per cent disability level under existing arrangement;

—Tariff level 13 in proposed scheme.

  Spouse—Yes—Age under 40

  Children—No

  
Existing
Arrangements
Proposed
Arrangements
Pension Scheme Benefit
  
If Tier 1 ill
health benefits
paid
P1) Lump sum benefit
£16,713
£31,623
P2) Pension to member pa
£5,571
Nil
P3) Pension to spouse pa
£2,786
Nil
Attributable benefits/Compensation scheme
A1) Lump sum award
£2,446
£5,000
A2) Pension to member pa
Nil
Nil
A3) Pension to spouse pa
£8,670
£3,253
War Pension
W1) Pension to member pa
£1,246
Nil
Lifetime value
Capitalised value of the above benefits (to nearest £1,000)
£155,000
£45,000

ATTRIBUTABLE INJURY REMAINS IN SERVICE

  Member—Other Rank, age 30 at injury, 10 years service, normal discharge (ie not invalided out of Service)

  Injury—internal derangement of the knee—6-14 per cent

  initial disability level under existing arrangement -leading to 20 per cent at later date;

  -Tariff level 13 in proposed scheme.

  
Existing
Arrangements
Proposed
Arrangements
Triple A payment
£5,000
Guaranteed Income Stream pa
Nil
War Gratuity
£707
War Pension pa
£1,246
Capitalised value of the above benefits (to nearest £1,000). If member subsequently qualifies
£21,000
£5,000


  None of the above benefits, except the Triple A payment, would become payable at the point of injury. The other benefits may become payable on leaving the Services.

INJURY CLAIM EMERGING WITHIN 5 YEARS OF RETIREMENT

  Member—Sergeant, age 50 at claim, retired at age 45, service at retirement 22 years, pay level 6, salary at retirement £25,298.15

  Injury—develops cancer of the kidney (accepted as attributable under existing arrangements not accepted under the proposed scheme)

  Spouse—Yes

  Children—Yes—2

  
Existing
Arrangements
Proposed
Arrangements
Pension Scheme Benefit
P1) Lump sum benefit
£24,078
£23,853
P2) Pension to member pa
£8,026
£7,951
P3) Pension to spouse pa
£4,013
£3,975
Attributable benefits/Compensation scheme
A1) Lump sum award
Nil
Nil
A2) Pension to member pa
Nil
Nil
A3) Pension to spouse pa
Nil
Nil
War Pension
W1) Pension to member pa
£6,251
Nil
W2) Pension to children pa
£1,573
Nil
W3) Spouse's pension pa
£4,719
Nil
Lifetime value
Capitalised value of the above benefits (to nearest £1,000)
£ 379,000
£233,000




 
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Prepared 9 April 2002