A guide to Armed Forces pensions

The amount of your Armed Forces pension will depend on several factors, including your length of service, rank and particular pension scheme. You don’t need to contribute part of your salary to the pension scheme as it’s publicly funded.

If you’ve made the required National Insurance contributions, you’ll likely also receive a UK State Pension. The State Pension is separate from the armed forces pension.

There are different pension schemes in place, including the Armed Forces Pension Scheme 1975 (AFPS 75), Armed Forces Pension Scheme 2005 (AFPS 05) and Armed Forces Pension Scheme 2015 (AFPS 15).

For AFPS 75, the pension is calculated as a percentage of your final pensionable pay, based on your length of service. The maximum pension you can receive is up to 48.5% of your final pensionable pay, plus a tax-free lump sum of three times your annual pension. 
 
For AFPS 05, your pension is 1/70th of your final pensionable earnings multiplied by the years and days of service. For example, if your final salary is £45,000 after 25 years’ service, your annual pension would be: £45,000 x 25 x 1/70 = £16,071. You would also receive a lump sum of £48,214, which is three times your annual pension.

The maximum pension you can receive is up to 57% of your final pensionable pay, plus a tax-free lump sum of three times your annual pension. This maximum comes from 40 years of service.

For AFPS 15, the pension is based on a Career Average Revalued Earnings (CARE) scheme. You earn a proportion of your pensionable earnings each year, and these amounts are adjusted annually to account for inflation. Under this scheme, you can choose to give up part of your pension in order to obtain a tax-free lump sum, as a lump sum isn’t paid automatically.

If you’re still serving in the forces, you can use the online Armed Forces Pension CalculatorOpens in a new window If you’re no longer serving, you’ll need to submit a preserved pension forecast formOpens in a new window (form 14) to get an estimate.

The armed forces pension increase in 2023 is 10.1% for pensions already being paid out. Armed Forces Pensions are index-linked. This means they are adjusted annually to keep pace with inflation, so you have enough money to live on even if goods and services increase in price. 

This annual increase is linked to the Consumer Prices Index (CPI), which is updated every year. It’s important to note that the pension increase is not fixed and can vary from year to year based on the country’s economic conditions.

The pension scheme you’re in will depend on your joining date and the rules in place at the time. 

If you joined before 6 April 2005, you’re likely to be a member of AFPS 75. If you joined between 6 April 2005 and 31 March 2015, you’re likely to be a member of AFPS 05. And if you joined on or after 1 April 2015, you’re likely to be a member of AFPS 15. 

However, there might be exceptions in certain cases. To find out which scheme you’re on, visit the Forces Pensions SocietyOpens in a new window website. 

To qualify for an Armed Forces pension, you generally need to have completed a minimum of two years of service. However, the specific requirements might vary depending on the pension scheme you’re enrolled in and your individual circumstances.

Under AFPS 75, if you die in service, your spouse or eligible partner will normally receive a short-term pension, a long-term pension and a tax-free lump sum. 
 
For the AFPS 05 and AFPS 15 schemes, the rules about survivor benefits are different. If you die while still serving in the forces, your spouse or eligible partner will normally receive an immediate pension paid for life and a tax-free lump sum. 
 
It’s important keep your nominated beneficiaries documents up to date to make sure your loved ones receive support if you die.

Armed Forces pensions that are not yet being paid out (you haven’t started taking money out) can be transferred under certain circumstances, but generally transfers can only be made to another defined benefit scheme.

It's recommended to get advice from a qualified financial adviser or contact the Armed Forces Pension Scheme administrators for specific guidanceOpens in a new window In some cases, you’ll need to apply to transfer your pension.

You can’t typically cash in your Armed Forces pension unless you’re critically ill or have a shortened life expectancy. They’re designed to provide a steady income during your retirement years, rather than be taken as a lump sum.

To claim your pension, you have to fill out and submit specific forms based on the scheme you’re in. The Veterans UK pensions information pageOpens in a new window can guide you through the process and provide you with the necessary forms and instructions. It’s best to start your pension claim well in advance of your intended retirement date to ensure a smooth transition.