What CARE actually means
CARE stands for Career Average Revalued Earnings, and it is the design behind AFPS 15, the scheme every serving member now builds. The name does the heavy lifting once you unpack it. Career average tells you the pension is worked out from your earnings across your whole career, not just your pay at the end. Revalued earnings tells you that each year's contribution is increased over time so it does not lose value while it sits waiting for you. Put those two ideas together and you have a pension that grows steadily, year by year, rather than one that hinges on a single final figure.
The mechanics are simpler than the jargon suggests. Each scheme year, which runs from 1 April to 31 March, the MOD takes 1/47th of your pensionable earnings for that year and adds it to what is often called your pension pot. That pot is not a sum of money you can withdraw; it is the running total of annual pension you have earned so far. When you eventually draw your pension, the revalued slices are added together to give your yearly income for life. There is no maximum number of years, so the pot keeps growing for as long as you serve.
The other half of CARE is the revaluation, and it is the part most people overlook. While you are still serving, each past year's slice is increased in line with the Average Weekly Earnings index, which broadly keeps your earlier years marching in step with current pay levels. Once you leave and your pension is deferred, or once it is in payment, the increases switch to the Consumer Prices Index instead. That revaluation is what stops a career average pension being eroded by inflation over a long career and a long retirement.
How CARE differs from final salary (AFPS 75 and 05)
To understand CARE properly, it helps to see what it replaced. AFPS 75 and AFPS 05 are both final-salary schemes. In a final-salary design, your pension is worked out from your pay at or near the end of your service, multiplied by your length of reckonable service. AFPS 05, for example, builds 1/70th of your final pensionable pay for each year served, up to about 57 per cent of that final figure. The defining feature is that your last few years of pay set the value of every year you served, so a late promotion lifts the whole pension.
CARE turns that logic on its head. Instead of one final figure driving everything, each year stands on its own. The 1/47th slice you bank in a junior year is based on what you earned that year, revalued thereafter, and a later promotion only improves the slices you earn from that point forward. For someone who climbs steadily through the ranks, a final-salary scheme can be more generous because the final pay reflects the top of the climb. For someone whose pay is fairly flat, or who reaches a high rank early and stays there, CARE can hold up well because every year has been kept in line with earnings along the way.
It is worth being clear that AFPS 15 uses a faster headline accrual rate than AFPS 05. AFPS 05 accrues at 1/47th of each year's earnings against AFPS 05's 1/70th of final pay. A faster fraction does not automatically mean a bigger pension, because the two schemes measure pay differently, but the richer accrual rate is part of how AFPS 15 was designed to remain a strong scheme despite dropping the final-salary link. This is an illustrative comparison of the rules, not a forecast of your own outcome.
A worked example (illustrative)
The clearest way to see CARE in action is to borrow the official worked example used by the MOD's Discover My Benefits service. Treat it as illustrative and built only on the scheme's own published figures. In year one, a member has pensionable earnings of 47,000 pounds. Divide that by 47 and you bank a slice of 1,000 pounds of annual pension. That slice is now sitting in the pot, earning revaluation each year until the member draws their pension.
In year two, the member's pensionable earnings rise to 47,500 pounds. Divide that by 47 and you bank a second slice of about 1,010 pounds. Meanwhile, the first slice has been revalued. Using the 2 per cent uplift in the official example, the original 1,000 pounds becomes 1,020 pounds. Add the revalued first slice of 1,020 pounds to the new second slice of 1,010 pounds and the running total reaches 2,030 pounds of annual pension after just two years. Repeat that pattern across a full career and you can see how the pot accumulates.
This is also why our calculator asks for your current pensionable pay rather than a true career average, which almost nobody can produce from memory. Because in-service revaluation keeps each past year broadly in step with earnings, a sound shortcut is to take your current pensionable pay, multiply by your years of service and divide by 47. As a rough illustration, current pay of 47,000 pounds over 20 years gives roughly 47,000 times 20 divided by 47, which is about 20,000 pounds of annual pension. Your real figure will differ, so always check an official forecast before making decisions.
Who CARE affects and from when
CARE through AFPS 15 affects almost everyone in uniform today. Every Regular and Reserve member who joined from 1 April 2015 has built their pension under CARE from day one. Just as importantly, from 1 April 2022 every serving member, including those who started on AFPS 75 or AFPS 05, builds AFPS 15 for all future service. So whatever scheme you began under, your current and future accrual is now career average.
The years in between are where the McCloud remedy comes in. The remedy period runs from 1 April 2015 to 31 March 2022. Members who had transitional protection were moved into AFPS 15 during this window, and the courts found that this treated different age groups unequally. The fix is that affected members get a choice, made when their pension becomes payable, of whether that remedy period counts towards their legacy scheme (AFPS 75 or 05) or towards AFPS 15. You make that choice using a Remediable Service Statement, and because the schemes are built so differently, the decision can change your pension, your lump sum and your Early Departure Payment.
One rule applies whatever your mix of schemes. You need at least two years of qualifying service to earn a pension at all. Build less than that and, broadly, you do not keep a pension entitlement under AFPS 15. Beyond that threshold, your benefits accrued in the legacy schemes before transition are protected as accrued rights, linked to your pay or rank at the point you leave, and paid when they were originally expected.
Why CARE matters to your pension
CARE matters because it changes the levers that move your pension. Under a final-salary scheme, the single biggest lever was your pay in the last few years, so chasing a late promotion could lift everything. Under CARE, the biggest lever is simply time served at a decent rate of pensionable pay, because every year banks its own revalued slice. Long service still pays, but the reward is spread evenly rather than concentrated at the end.
The revaluation feature is the quiet hero of CARE and the reason it is fairer than it first looks. Many people hear career average and assume their early, lower-paid years will drag the whole pension down. They will not, because each early slice is revalued in line with the Average Weekly Earnings index while you serve and the Consumer Prices Index once you have left or are drawing it. That is what keeps your twenty-year-old self's contribution relevant to your sixty-year-old self's retirement.
CARE also shapes how you take your money. AFPS 15 pays no automatic lump sum, unlike AFPS 75 and AFPS 05, which both pay a tax-free lump sum of three times your annual pension. Under AFPS 15 you create a lump sum yourself by commuting, that is by giving up some annual pension in exchange for cash. The exchange rate is fixed at about 12 to 1, so every 1 pound of yearly pension you surrender buys about 12 pounds of tax-free cash, and you can commute up to 25 per cent of your pension under the HMRC limit. That trade-off is permanent, so it deserves careful thought.
Common misunderstandings about CARE
The most common mistake is thinking that career average means an average of your salaries. It does not. CARE never averages your pay. It banks a separate 1/47th slice from each year's earnings and revalues each slice independently. The word average refers to the fact that your whole career feeds the pension, not that the scheme adds up your pay packets and divides by the number of years.
A second misunderstanding is that the pot is a pile of cash you could cash in, like a defined contribution pension or an investment account. It is not. AFPS 15 is a defined benefit scheme, so the pot is an accounting record of the annual pension you have built, guaranteed by the scheme and paid as an income for life. The value does not rise and fall with the stock market, and you cannot draw it down whenever you fancy. The only cash element you choose is the lump sum you create by commuting pension.
A third trap is assuming AFPS 15 must be worse than the old final-salary schemes. It is different, not automatically worse. The faster 1/47th accrual, the in-service earnings revaluation and the absence of a maximum number of years all work in members' favour, particularly for those with long service or relatively flat pay progression. The honest answer for any individual is that it depends on your rank profile and career length, which is exactly why a personalised comparison or an official forecast beats a rule of thumb.
Tax treatment and related AFPS terms
On tax, the pension income you eventually draw from a CARE scheme is taxable as earned income in the normal way, through PAYE, just like the pensions from AFPS 75 and AFPS 05. What is tax-free is the lump sum. Because AFPS 15 has no automatic lump sum, the tax-free cash is the amount you generate by commuting, at the fixed rate of about 12 to 1 and within the 25 per cent commutation limit. If you leave early and qualify for an Early Departure Payment, the EDP lump sum is also tax-free, while the EDP monthly income that bridges you to pension age is taxable.
CARE sits alongside several other AFPS terms you will meet. The accrual rate is the 1/47th fraction at the heart of the scheme. Pensionable pay is the slice of your earnings the 1/47th is applied to, which usually excludes most allowances. Index-linking or revaluation is the yearly increase that protects the pot, by Average Weekly Earnings while serving and by the Consumer Prices Index once deferred or in payment. A deferred member is someone who has left but is not yet drawing their pension, whose CARE pot keeps being revalued in the meantime.
Two more terms tie directly into CARE outcomes. The Early Departure Payment, or EDP, is the bridge for those who leave before pension age with enough service; under AFPS 15 the broad gateway is 20 years' service and age 40, the lump sum is 2.25 times your deferred pension and the income starts at 34 per cent of it. Commutation, the act of swapping pension for the tax-free lump sum, matters more under AFPS 15 precisely because there is no automatic lump sum. Understanding how these terms connect helps you read your own statements with confidence.
How to check your own position and next steps
The first step is to find out which schemes you actually hold. If you joined before April 2015 you may have legacy service in AFPS 75 or AFPS 05, a remedy period from 1 April 2015 to 31 March 2022 where you have a choice, and AFPS 15 CARE service from April 2022 onwards. If you joined from April 2015, your pension is pure CARE. Knowing your mix tells you which rules apply to which slices of your service, and that is the foundation for any sensible estimate.
Next, get the real numbers rather than relying on rules of thumb. Veterans UK provides official forecasts: serving members request a forecast using form 12, and those who have already left and have a preserved pension use form 14. If you are affected by McCloud, your Remediable Service Statement sets out the legacy and AFPS 15 figures side by side so you can compare. A public calculator like this one is built to give a quick, transparent estimate from the scheme's published factors, but it cannot see your representative pay tables or your age-banded factors, so it is a starting point, not a final answer.
Finally, use the estimate to frame your decisions, then take them seriously. If you are weighing up commutation, remember the trade is permanent and the rate is fixed at about 12 to 1. If you are nearing the 20 years and age 40 gateway, an Early Departure Payment may change your timing. And if you have a McCloud choice ahead, model both options before you commit. This site is independent and is not affiliated with the MOD, Veterans UK or JPAC, and it provides estimates rather than regulated financial advice, so for a life-changing decision speak to a suitably qualified adviser and lean on your official forecast.