A Charity offering personal help and advice for all serving and former members of the Royal Navy, Royal Marines, their Reserves and Families

ARMED FORCES PENSION REDUCTION UNDER NATIONAL INSURANCE MODIFICATION RULES

Published 01/05/2019 12:12:00, by Marina Maher

Upon reaching State Retirement Age (SRA) members of the Armed Forces in receipt of AFPS75 and/or AFPS 75/15 are likely to have their Armed Forces Pension reduced if they had served prior to 1 April 1980 and separately if they served prior to 5 April 1997.


The one-off reduction in pension relating to service prior to 5 April 1980 is fairly minimal at a rate of £0.88 for each complete year of Reckonable Service prior to this date.  E.g. 10 years = £8.80.  This adjustment is made at SRA whether or not an individual actually takes their State Pension or defers it.


The other more significant one-off reduction for service prior to 5 Apr 1997, which takes place only upon drawing State Pension, relates to what is known as Guaranteed Minimum Pension (GMP). The GMP is the minimum pension which a United Kingdom occupational pension scheme has to provide for those employees who were Contracted Out of the State Earnings-Related Pension Scheme (SERPS) between 6 April 1978 and 5 April 1997. AFPS 75 was a Contracted-Out Scheme. The amount is said to be 'broadly equivalent' to the amount the member would have received had they not been Contracted-Out. 


It has recently come to light from a case that Equiniti appear to have been making the adjustments when individuals reach the age of 65 – the old State Retirement Age – and not at when individuals reach their actual revised State Pension start date under the new State Pension introduced in 2016.


If you are in receipt of AFPS 75 benefits and have reached your 65th birthday since 1 April 2016 but not yet receiving the new State Pension check to see if your Equiniti Advice of Payment notification has correctly stated “Pension Reduced from State Retirement Age”.  If it says “Pension Reduced from Birthday” call Equiniti 0345 121 2514 and seek immediate correction.

 

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