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Armed Forces Pensions

Volume 554: debated on Monday 26 November 2012

17. What comparative assessment he has made of the value and terms of armed forces pensions and other public sector pensions. (129616)

The Minister of State, Ministry of Defence (Mr Mark Francois): There are currently two armed forces pension schemes in operation, known as armed forces pension scheme 75 and armed forces pension scheme 05. These are due to be superseded in 2015 by what is currently referred to as the future armed forces pension scheme. That scheme was born out of the recommendations of Lord Hutton’s independent public service pension commission report.

As a member of the armed forces parliamentary scheme, I often have the opportunity to discuss pension provision with serving members of the armed forces. Surprisingly, not only those coming to the end of their term of service but young soldiers too raise the issue. What steps are being taken better to communicate to service personnel the future terms and conditions of their pensions?

When I was in Camp Bastion two weeks ago for the remembrance celebrations, I had the pleasure of meeting a dozen or so regimental sergeant majors, who impressed upon me—at close range, shall we say?—a number of questions about pensions. Perhaps I could help to reassure them and my hon. Friend. John Moore-Bick, who heads the Forces Pension Society, which is expert in this matter, has said that the new pension scheme is

“as good as it gets”.

We are redoubling our efforts to explain that to serving personnel, including by developing a new pensions calculator from the middle of next year, so that they can plug in all the details on how pensions will affect them and get a clear answer.

Last week, the Secretary of State announced plans to allow serving personnel to access their pension funds early to buy a house. Will the Minister confirm that an individual who takes up that offer will therefore receive lower pension payments in future?

Lord Hutton’s report confirmed that the armed forces pension schemes in general stood up very well compared with others in terms of benefits to members. We should bear it in mind that, unlike many other schemes, the armed forces scheme will remain non-contributory and that the normal pension age will be lower than it is for most other schemes. Personnel will also qualify for an early payment at age 40. We are looking at incentives to assist servicemen to purchase their own homes. That is actively being worked on but no final decisions have been taken.