First and foremost, I want to express my gratitude for your service. After dedicating 12 years to the British Army, you have certainly earned the opportunity to look forward and comprehend the financial benefits available to you. A major concern many have is, “What will happen to my pension?”
It’s a great question, and the answer depends on which pension scheme you’re on. Since 2015, all new personnel are on the Armed Forces Pension Scheme 2015 (AFPS 15). Most personnel who were serving before then have been moved to this scheme too.
So, let’s break down what your pension looks like after 12 years under AFPS 15.
Do I Get a Pension Straight Away ?
This is the most important thing to know: after 12 years of service, you will not receive an immediate monthly pension.
Under AFPS 15, you need to serve until at least age 60 to start drawing your full pension. However, the pension you have earned over those 12 years is far from lost! It is kept safe for you in what is called a deferred pension.
What is a Deferred Pension ?
Think of a deferred pension as a pension pot that is locked away and waiting for you. For every year you served, you built up a guaranteed income for your future.
Here’s how it’s calculated under AFPS 15:
- The Formula: Each year, you earn a pension equal to 1/47th of your annual salary for that year.
- It Grows Over Time: The pension you’ve earned doesn’t just sit there. Each year, it is increased by the rate of inflation (the Consumer Price Index or CPI) to make sure it keeps its value until you can claim it.
So, after 12 years, you have 12 years’ worth of these pension “slices” all added together, growing quietly in the background until you reach pension age.
What About a Lump Sum ? The Resettlement Grant
While you won’t get a monthly income right away, you may be entitled to a tax-free lump sum to help you transition to civilian life. This is called a Resettlement Grant.
To be eligible for this grant, you must have served for at least 12 years and not be eligible for an immediate pension. For an Other Rank leaver, this grant is a significant, one-off payment designed to help you get settled.
Can I Claim My Pension Early ?
You have the option to apply for an early claim on your deferred pension, but you must be at least 55 years old to do so. If you decide to claim it before reaching your State Pension Age, the total amount you receive will be lower since it will be distributed over a longer duration.
In a Nutshell : Your Pension After 12 Years
- Immediate Monthly Pension : No, this is not available after 12 years.
- Deferred Pension : Yes! You have earned a valuable pension that is kept safe for you and grows with inflation until you reach pension age (at least age 60 for the full amount).
- Tax-Free Lump Sum : Yes, you will likely be eligible for a Resettlement Grant to help you transition to civilian life.
The pension you’ve earned is a significant reward for your service. While you can’t access it right away, it provides a solid foundation for your financial security in the future.