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

Indexation of AFPS Pensions - What happens at 55?

Published 02/09/2020 12:51:00, by Marina Maher

By David Scholey, Regional Manager South East.

I’m often asked, or I become drawn into a conversation on ex-matelot groups on social media about what happens to AFPS pensions at 55?

This is a magical age because whether your pension or Early Departure Payment (EDP) is on AFPS75, AFPS05, AFPS15 or more commonly a combination of two of those, everything becomes index linked. This means that it now starts to have inflation added to it each April. Inflation is a measure of how much the prices of goods and services increase over time. The inflation figure used by the government in relation to pensions is the Consumer Price Index (CPI). The value of CPI is published monthly but the one used for pension rises is the September figure. This is announced mid-October and applied the following April.  This process goes on not only with AFPS but across all pension schemes in the public sector and the State Pension. Therefore, it affects a great deal of people and is therefore considered newsworthy. Hence it takes over half the news bulletin on the announcement day. It’s nice to know what the pension increase will be well beforehand.

The big win with indexation though is that when it commences at 55, it is also applied retrospectively. That means at 55, they also add up all the September rates of CPI inflation since you started to draw that pension or EDP and apply at 55. This can be a significant increase for those who left as early as 37 (AFPS75 Officers) and 40 (AFPS75 Other Ranks and All Ranks AFPS05/15).

In all, your 55th birthday is a nice one to have financially.

More information can be found at:     AFPS75,   AFPS05AFPS15                         


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