Select Committee on Defence Memoranda


Annex B

SUMMARY OF COSTS OF BENEFITS UNDER THE PROPOSED ARMED FORCES PENSION SCHEME SET OUT IN 2001 CONSULTATION DOCUMENT

COSTS EXPRESSED AS A PERCENTAGE OF PENSIONABLE PAY


Existing Scheme Proposed Scheme (based on IP at age 40 and 18 years service)


Members Benefits
Retirement
a) pension12.8%11.8%
b) lump sum2.4%2.2%
Exit with preserved benefits
a) pension2.5%2.6%
b) lump sum0.7%0.7%
Sub total retirement and preserved benefits 18.4%17.3%
Ill health
a) pension
b) lump sum
1.0%
0.2%
1.3%
0.3%
Sub total1.2%1.6%
Spouse's Benefits
On death after:
a) retirement
b) exit with preserved benefits
c) ill-health
d) in service
1.3%
0.7%
0.2%
0.1%
1.3%
0.8%
0.3%
0.3%
Sub total2.3%2.7%
Lump Sum on death in service0.1% 0.4%
Sub total0.1%0.4%
Grand Total22.0%*22.0%*



  Note 1—1% of pensionable pay is approximately £40 million per annum

Source—Government Actuary's Department

  Note 2 —The figures were calculated using the latest demographic data at the time the review calculations were carried out (which was over the period 1999 to 2001).

  This figure is an average for Officers and Other Ranks—for Officers the average value is nearly 34% and an average for Other Ranks of just over 18% (reflecting their average shorter length of service).


 
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Prepared 14 March 2002