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Armed Forces Compensation Scheme

Volume 506: debated on Tuesday 2 March 2010

To ask the Secretary of State for Defence what estimate he has made of the cost in 2009-10 to his Department of the changes to the Armed Forces Compensation Scheme announced on 10 February 2010. (318027)

[holding answer 22 February 2010]: The Ministry of Defence (MOD) accounts for the liabilities arising from the Armed Forces Compensation Scheme on an accruals basis, which means that the full life-time value of awards is set aside in the year in which the injury, illness or death occurred, even though payments may be made through the Guaranteed Income Payments over an individual’s lifetime. Details of the existing liabilities can be found in the Armed Forces Pension Scheme resource accounts which are placed in the Library of the House.

The MOD has estimated that the additional liabilities arising from the changes proposed in the review would be between around £30 million and £40 million per annum. These liabilities would be met from within existing provision in the Defence budget.

The liabilities (or cost) in 2009-10 do not arise until the necessary legislative amendments to the scheme are actually in place. The accounts in the financial year in which the legislation is made will reflect the change in liabilities arising from the review.