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Home arrow Resettlement arrow Personal Finance arrow Is There An Unclaimed Preserved Pension Waiting For Someone You Know?
Is There An Unclaimed Preserved Pension Waiting For Someone You Know? PDF Print E-mail

If you have a relative or friend who thinks they might have a preserved pension as a result of time in the Armed Forces, read on

The Forces Pension Society delivers a comprehensive pensions presentation as part of Financial Aspects of Resettlement briefings which form part of the resettlement process for personnel who are leaving the Armed Forces.

At these briefings, having been given a good grasp of their pension benefits, personnel in attendance often ask about what pension benefits might be awaiting the fathers or fathers-in-law , some of whom could do with the extra money. The same thing crops up quite often on ARRSE, Rum Ration and E-Goat – sometimes it is the veteran asking the question and sometimes it is a concerned relative or friend.

Thus this article is aimed at friends and family of veterans rather than addressing in-service issues and, given that every year, hundreds of thousands of pounds remain unclaimed, there is a real need for the information which follows to be widely read and understood.

There are several reasons why pensions remain unclaimed, but the fact is that the sums of money involved, whilst modest in many cases, could make a big difference to the quality of life of their rightful owner. 

Typically, members of the Armed Forces serve for relatively short periods of time, most leaving before the point at which they are paid an immediate pension on discharge. For many, the Resettlement Grant is an attractive reward to ‘pull them through’ to the 12 year point (nine years for officers), when they are eligible for this payment, but many more don’t serve long enough to reach this point. 

For some older veterans, pensions were a bit of a foggy area, as prior to April 1975, an officer had to serve 16 years from age 21 and other ranks had to serve 22 years from age 18 to qualify for any form of pension award. Those leaving before this point might have qualified for a Resettlement Grant but many left with nothing. 

Veterans UK has asked the Forces Pension Society to help spread the word about unclaimed preserved pensions (there are currently between 7,000 and 8,000 of them!) and we are very happy to do so. Veterans UK tries to ensure that preserved pensions are paid when they are due. However, when an individual leaves the Armed Forces at, say, age 25, he or she may move many times before reaching the preserved pension age. It is most unusual for Veterans UK to be informed of these movements, so tracking people down becomes a full-scale operation. 

This article looks at the history of preserved pensions in AFPS 75 (the scheme in which vast majority of these unclaimed preserved pensions have been earned) and what to do to claim. 

AFPS 75 preserved pensions were introduced for those in service in the Regular Armed Forces on 1 April 1975 but, in order to qualify, an individual had to be age 26 or over when he left and to have at least five years reckonable service for pension purposes. These qualification criteria are called the ‘Vesting Period’. Those who left service before 1 April 1975 were not entitled to preserved pensions, neither were those who left after this date without ‘Vesting’. In the rare case where someone left after 1 April 1975 without a preserved pension (because they hadn’t ‘Vested’) and re-joined within 30 days, they were allowed to count the earlier period of service together with the new for future qualification.

In 1978 the criteria were changed slightly, in that the requirement to be aged 26 or over was removed. The five years reckonable service from age 21 for officers and age 18 for other ranks remained.

On 6 April 1988 new ‘Vesting’ criteria were introduced that required officers to give two years reckonable service from age 21 to qualify for a preserved pension. For other ranks this was two years from age 18.

Preserved benefits usually comprise a pension in the form of a taxable annual income and a one-off tax-free lump sum equal to three times the annual income payable. If the pension is very small, the preserved pensioner is often invited to take an annual taxable lump sum rather than a monthly pension and, in some cases, the pension is converted into a one-off taxable lump sum under the small pension commutation rules. Preserved pensions in AFPS 75 are payable at age 60 for those who left before 6 April 2006. For those in service on or after that date, the proportion of the pension earned before 6 April 2006 is payable at age 60 with the balance payable at age 65. 

Some veterans might think their preserved benefits are so small as to be not worth claiming – but take a look at this:
  • Someone who left in April 1978 with a preserved pension of £800 would now have a preserved pension of £3,7494.03 and a preserved pension lump sum of £11,382.09.
  • Someone who left in April 1982 with a preserved pension of £1,100 would now have a preserved pension of £3,410.37 and a preserved pension lump sum of £10,231.11
  • Someone who left in April 1985 with a preserved pension of £1,500 would now have a preserved pension of £3,964.26 and a preserved pension lump sum of £11,892.78.
I think most would now agree that these sums, which have been increased to take account of inflation, could make a very real difference to a lot of lives.
 
There are groups of individuals who will not have any Armed Forces Pension Scheme entitlement. They are people who joined on non-pensionable terms (being entitled instead to a gratuity on successful completion of their engagement), members of the Volunteer Reserve, personnel who opted out of the Armed Forces Pension Scheme and those who left with a preserved pension and transferred it out to other occupational pension arrangements. 

Those who left with an immediate pension or an invaliding pension will not have preserved benefits to claim.

If you have a relative or friend who thinks they might have a preserved pension as a result of time in the Armed Forces, the address to write to is:

Veterans UK
Defence Business Services
Pensions Division
Mail Point 480
Kentigern House
65 Brown Street
Glasgow
G2 8EX

In order for the record of their service to be identified they will need to provide their full name, service number, regiment (where appropriate) and the year of their discharge.

Further Information

If you have any questions about your Armed Forces pension and you are a member of the Forces Pension Society, you can find answers by looking at the Society’s web site or by calling the dedicated help line on 020 7735 0110. If you are not yet a member, the cost is modest and benefits (in addition to advice from an expert) include numerous discounts on a range of useful products and services and the assurance that a dedicated organisation, independent of the Government, is there to help you get the most from your Armed Forces pension.

For more information, go to www.ForcesPensionSociety.org

 
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