Select Committee on Defence Appendices to the Minutes of Evidence



Annex G

 

ARMED FORCES—JOINT COMPENSATION REVIEW

  Further example cases

  The 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.

  War Pension Scheme benefits are shown at 2001-02 rates.

  The examples chosen are intended to illustrate the main features of the Review proposals. They do not cover every feature of the proposals and do not show all potential interactions with benefits potentially available as DWP allowances or means-tested benefits.

  The examples provided are:—

 

1.  Death in service

Other Rank, two children

2.  Injury leading to discharge from services

Tariff 2—eg severe spinal cord injury

3.  Injury leading to discharge from services

Tariff 4—eg complete blindness

4.  Injury leading to discharge from services

Tariff 10—eg total deafness in one ear

5.  Injury leading to discharge from services

Tariff 12—eg severe damage to tendons in one leg
—continuing disability

6.  Injury not leading to discharge

Tariff 14—eg loss of teeth

 

  Note that where benefits are payable from the Armed Forces Pension Scheme the benefits quoted under the proposed arrangements include allowance for the changes.

EXAMPLE 1

Attributable Death in Service

  Member—Sergeant, 12 years service, age 32 at death, pay level 6, salary 25,298.15

  Spouse—Yes—aged under 40

  Children—Yes—two (assumed to be aged under 16)

 

 

Existing Arrangements

Proposed Arrangements

Pension Scheme Benefit

   

P1) Lump sum benefit

24,458

75,894

P2) Pension to spouse pa

2,752

4,246

P3) Pension to children (total) pa

2,752

4,246

Attributable benefits/Compensation scheme

   

A1) Lump sum award

12,229

Nil

A2) Bereavement allowance

Nil

20,000

A3) Pension to spouse pa

7,175[1]

9,057

A4) Pension to children pa

1,070[2]

5,515

War Pension

   

W1) Spouse's pension pa (Lower rate)

4,735

Nil

W2) Children pensions (total) pa

1,578

Nil

Lifetime value

   

Capitalised value of the above benefits (to nearest
1,000)

171,000

277,000

EXAMPLE 2

Attributable Injury Leading to Discharge and Subsequent Death in Retirement

  Member—Lieutenant, six years service, age 28 at injury, level 9, salary 24,378.35

  Injury—Severe spinal cord injury:—100 per cent disablement under existing arrangements

—Tariff level 2 in proposed scheme

  Death occurs at age 48 and is attributable to the injury

  Spouse—Aged under 40

  Children—Yes—two

 

 

 



Existing Arrangements

Proposed Arrangements
If Tier 3 ill health
benefits paid

Pension Scheme Benefit

   

P1) Lump sum benefit

17,127

20,895

P2) Pension to member pa

5,709

6,965

P3) Pension to spouse pa

2,855

3,483

Attributable benefits/Compensation scheme

   

A1) Lump sum award

17,642

20,000

Triple A payment

 

175,000

A2) Pension to member pa

11,327[3]

13,625

A3) Pension to spouse pa

11,781

6,813

War Pension

   

W1) Pension to member pa

6,251

Nil

W2) Contingent spouse's pension pa

4,812

Nil

Lifetime value

   

Capitalised value of the above benefits (to nearest 1,000)

491,000

595,000

EXAMPLE 3

Attributable injury leading to discharge

  Member—Colonel, 20 years service, age 43 at injury, salary 54,560.20, level 6

  Injury—Complete blindness—100 per cent disablement under existing scheme

—Tariff 4 in proposed scheme

  Spouse—Yes—Aged over 45

  Children—No

 

 



Existing Arrangements

Proposed Arrangements
If Tier 3 ill health
benefits paid

Pension Scheme Benefit

   

P1) Lump sum benefit

67,101

60,796

P2) Pension to member pa

22,367

20,265

P3) Pension to spouse pa

11,183

10,133

Attributable benefits/Compensation scheme

   

A1) Lump sum award

13,778

 

A2) Triple A payment

 

75,000

A3) Pension to member pa

13,757[4]

39,725

A4) Pension to spouse pa

16,338[5]

19,863

War Pension

   

W1) Pension to member pa

6,251

Nil

Lifetime value

   

Capitalised value of the above benefits (to nearest
1,000)

870,000

1,214,000

 

EXAMPLE 4

Attributable injury leading to discharge

  Member—Sergeant, 20 years service, aged 38 at injury, salary 25,298.15, level 6

  Injury—Total deafness in one ear ( no tinnitus/discharge)

—20 per cent disablement under existing arrangement

—Tariff 10 in proposed scheme

  Spouse—Yes—aged below 40

  Children—No

 

 



Existing Arrangements

Proposed Arrangements
If Tier 2 ill health
benefits paid

Pension Scheme Benefit

   



P1) Lump sum benefit

23,847

27,830

P2) Pension to member pa

7,949

9,277

P3) Pension to spouse pa

3,975

4,639



Attributable benefits/Compensation scheme

   



A1) Lump sum award

2,446

 

A2) Triple A payment

 

15,000

A3) Pension to member pa

[6]

5,928

A4) Pension to spouse pa

5,952[7]

2,964

War Pension

   

W1) Pension to member pa

1,250

Nil

Lifetime value

   

Capitalised value of the above benefits (to nearest 1,000)
217,000

 

311,064

EXAMPLE 5

Attributable injury leading to discharge

  Member—Corporal, 12 years service, aged 30 at discharge, salary 24,298.05, level 5

  Injury—Dislocated shoulder with full recovery

—Nil per cent disablement under existing arrangements

—Tariff 12 in proposed scheme

  Spouse—No

  Children—No

 

 

 



Existing Arrangements

Proposed Arrangements
If Tier 1 ill health
benefits paid

Pension Scheme Benefit

   



P1) Lump sum benefit

14,883

36,447[8]

P2) Pension to member pa

4,961

4,165[9]



Attributable benefits/Compensation scheme

   



A1) Lump sum award

Nil

Nil

A2) Triple A payment

Nil

7,500

A3) Pension to member pa

Nil

Nil



War Pension

   



W1) Pension to member pa

 

Nil



Lifetime value

   



Capitalised value of the above benefits (to nearest
1,000)

104,000

71,000

EXAMPLE 6

Attributable injury remaining in service

  Member—Corporal, six years service, aged 25 at injury, salary 24,298.05, level 5

  Injury—Loss of teeth—1-5 per cent disablement under existing arrangements

—Tariff 14 in the proposed scheme

 

 

Existing Arrangements

Proposed Arrangements

War Pension Gratuity (if qualifies)

1,905

 

Tariff 14 lump sum

 

2,500

Capitalised value of the above benefits

1,905

2,500

 

 


1   It should be noted that since this draft paper was written, the position on some issues will have moved on. It is provided as background to inform the Committee of the earlier work done to assist in developing the Department's proposals. Back

2   From 1 April 2002, J Sainsbury plc now offers stakeholder pensions to new entrants, not a final scheme Back

3   In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable widow's and children's pensions would be replaced by the attributable widow's and children's pensions. Back

4   In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable members and widow's pensions. Back

5   In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable members, widow's and children's pensions would be replaced by the attributable members, widow's and children's pensions. Back

6   In this example the non-attributable pension is higher than the attributable pension-no additional payment is made. This occurs when the individual has long service and a low degree of disability. Back

7   In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable widow's pension would be replaced by the attributable widow's pension. Back

8   Tier 1 gratuity assumed to be 1.5 months per year of service, with a minimum of six months salary and a maximum of two years salary-this approach has not been finalised. Back

9   Preserved pension payable from age 60. Back

 
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