Armed Forces Pension Glossary
Every armed forces pension term explained in one place for serving personnel and veterans. This is the AFPS jargon you meet on your pension statement and in our calculators, from accrual rate and commutation factor to EDP and remediable service, with current figures and links to work out your own numbers. For injury or illness compensation, which is separate from your pension, see the AFCS and War Pension pages.
Accrual rate
Definition: The accrual rate is the fraction of pay you earn as pension for each year of service. AFPS 05 builds 1/70th of final pay a year, and AFPS 15 builds 1/47th of that year's pensionable earnings.
A faster accrual rate means more pension for the same length of service, which is one reason the scheme you are in matters. See it in your own figures with the AFPS 15 calculator.
See also: Pensionable pay, CARE, Final salary.
CARE (Career Average Revalued Earnings)
Definition: CARE is the type of scheme used by AFPS 15. Instead of your final salary, it builds a slice of pension from your pensionable earnings each year and revalues every slice to keep pace with the cost of living.
Add the revalued slices together and you have your annual pension. It replaced the older final-salary design for service from April 2015. Estimate a CARE pension with the AFPS 15 calculator.
See also: Accrual rate, Final salary, Index linking.
Commutation factor
Definition: The commutation factor is the exchange rate for giving up yearly pension in return for tax-free cash. On AFPS 15 it is roughly £12 of lump sum for every £1 of annual pension you give up, using factors set by the Government Actuary's Department (GAD).
A higher factor means more cash for each pound of pension sacrificed. Work out the trade with the commutation calculator, and see whether it pays off in is it worth commuting?.
See also: Index linking, Immediate pension.
Early Departure Payment (EDP)
Definition: An Early Departure Payment is paid to people who leave the forces before their scheme pension age but have served long enough to qualify. It gives a tax-free lump sum plus a monthly income that bridges the gap until the full pension starts.
The amount depends on your scheme and your age and service when you leave. Estimate yours with the EDP calculator, or read the Early Departure Payment guide.
See also: Immediate pension, Preserved pension.
Final salary
Definition: A final-salary scheme works out your pension from your pay at or near the end of your service, multiplied by your length of service. AFPS 75 and AFPS 05 are final-salary schemes.
Because the pension is tied to end-of-career pay, a late promotion can lift the whole pension. AFPS 15 replaced this with a career-average (CARE) design for service from April 2015. Compare them in AFPS 75 vs 05 vs 15.
See also: CARE, Pensionable pay, Accrual rate.
Immediate pension
Definition: An immediate pension starts paying as soon as you leave, rather than being preserved until later. On AFPS 75 it is the well-known reward for long service, payable on discharge once you reach the qualifying point.
Qualifying usually means a set length of reckonable service and a minimum age. Model an AFPS 75 pension with the AFPS 75 calculator.
See also: Early Departure Payment, Preserved pension, Final salary.
Index linking
Definition: Index linking, or the annual Pensions Increase, is the yearly uprating that keeps your pension in line with the cost of living. Pensions in payment and preserved pensions are increased each April, broadly in line with prices (CPI).
This protects the buying power of your pension over a long retirement. See the current figure on the 2026 pension increase page, or model it with the pension increase calculator.
See also: Preserved pension, Commutation factor.
Pensionable pay
Definition: Pensionable pay is the part of your earnings used to work out your armed forces pension. In the final-salary schemes (AFPS 75 and 05) it is based on representative pay for your rank near the end of service; in AFPS 15 it is your actual pensionable earnings each year. Specialist pay and most allowances are excluded.
It is the starting point for every AFPS calculation. See how it feeds the figures in how the schemes build up or the AFPS 05 calculator.
See also: Accrual rate, Final salary.
Preserved (deferred) pension
Definition: A preserved, or deferred, pension belongs to someone who has left the scheme but is not yet drawing it. The benefits are held and revalued each year until scheme pension age. Most people who leave before pension age without an EDP become deferred members.
A preserved pension is paid later, index-linked in the meantime. Estimate one with the preserved pension calculator, or check which scheme you are in.
See also: Index linking, Immediate pension, Early Departure Payment.
Remediable service (McCloud)
Definition: Remediable service is the period from 1 April 2015 to 31 March 2022 affected by the McCloud remedy. Members moved into AFPS 15 during this time can choose, at retirement, whether that period counts towards their old scheme (AFPS 75 or 05) or AFPS 15.
The choice can change your pension, lump sum and EDP, so it is worth modelling. Use the McCloud remedy calculator and read the McCloud remedy guide.
See also: Final salary, CARE.
Frequently asked questions
James Hartley
James Hartley spent 22 years in the British Army, including unit personnel administration and pensions and records duties, and now writes the scheme guides and scenario pages on this site. He is not a regulated financial adviser, so the content is general information rather than personal advice.
Sources: gov.uk · GAD factors · Veterans UK · Forces Pension Society · MoneyHelper.