What the Government Actuary's Department actually is
The Government Actuary's Department, usually shortened to GAD, is a specialist part of government staffed by actuaries. Actuaries are the people who put a present-day cash value on future promises, working out what a stream of pension payments stretching decades into the future is worth in today's money. GAD is independent of the Ministry of Defence and of Veterans UK, and it does the same job across most public service pension schemes, not just the armed forces ones. So when you read about the Teachers' Pension Scheme or the NHS scheme using actuarial factors, it is the same department behind the numbers.
For armed forces pensions, GAD's main job is to publish the conversion factors that turn one kind of benefit into another. The clearest example is commutation, where you give up a slice of annual pension in exchange for a one-off tax-free lump sum. Somebody has to decide how many pounds of cash is a fair swap for one pound of yearly income given up for the rest of your life, and that somebody is GAD. The factors also sit behind Early Departure Payments and the McCloud remedy calculations, which I will come to.
It helps to think of GAD as the rule-setter and Veterans UK, through JPAC, as the administrator that applies those rules to your record. GAD does not hold your service history, does not run your pension and will never write to you about your own benefits. It publishes the tables; the pension administrator looks up your details against them. On this site we use the latest published GAD factors so that the estimates the calculator gives you line up with how the real scheme works.
How GAD factors work across AFPS 75, 05 and 15
The three armed forces schemes use GAD factors differently, and this is where a lot of confusion starts. AFPS 75 and AFPS 05 are both final-salary schemes that pay an automatic tax-free lump sum of three times your annual pension, so you do not have to do anything to receive that cash. The GAD factors only come into play for the legacy schemes when you ask for extra, optional commutation, such as resettlement commutation, where you surrender more pension for more cash on top of the automatic lump sum.
On the legacy schemes those extra commutation rates are not a single tidy number. GAD publishes age-banded tables, for example the resettlement commutation table and the trivial commutation tables, where the factor changes according to your exact age in years and months at the relevant date. A younger member giving up the same slice of pension receives a different amount of cash from an older member, because the younger person is expected to draw that income for longer. That is why a legacy commutation quote always depends on your precise age and has to come from an official source rather than a rule of thumb.
AFPS 15 is the modern career average scheme, and here GAD has deliberately made things simpler. There is no automatic lump sum at all, so if you want tax-free cash you create it by commuting part of your pension. The commutation rate is fixed at 12:1 across the whole scheme, meaning twelve pounds of lump sum for every one pound of annual pension you give up, and you can commute up to 25 per cent of your pension. Because that 12:1 figure does not move with your age, it is the one commutation case a calculator can model precisely, which is exactly what the AFPS 15 calculator on this site does.
Early Departure Payments also draw on GAD's work. EDP is the package paid to people who leave before their scheme pension age but have served long enough to qualify, broadly 18 years of service and age 40 on AFPS 05, or 20 years and age 40 on AFPS 15. The lump sum and the bridging income that make up an EDP are sized using factors and fractions that GAD reviews, so the department's hand is behind those figures too even though most people never see the underlying tables.
A worked example: GAD's 12:1 factor on AFPS 15
Here is an illustrative example using only the scheme figures, so treat the round numbers as made up for teaching rather than a quote for your own pension. Imagine a member reaches their pension age on AFPS 15 with a built-up annual pension of 10,000 pounds before any commutation. They decide they want some tax-free cash at retirement, so they choose to commute the maximum 25 per cent of their pension. Twenty-five per cent of 10,000 pounds is 2,500 pounds of annual pension surrendered.
Now GAD's fixed 12:1 factor does the work. The 2,500 pounds of pension given up is multiplied by 12, which produces a tax-free lump sum of 30,000 pounds. In return the member's annual pension drops permanently from 10,000 pounds to 7,500 pounds. That reduced pension still rises each year with the cost of living, so the cut is taken from a lower starting figure but the inflation protection carries on as normal. Pensions already in payment rise by 3.8 per cent from April 2026, to give a sense of the scale of that yearly uplift.
The lesson from the arithmetic is that 12:1 is a modest exchange rate. You are handing over an income you would otherwise have drawn for the whole of your retirement, potentially thirty years or more, and receiving twelve years' worth of that income up front in cash. Whether that is a good deal depends entirely on your own circumstances, your health, your other savings and whether you have an immediate use for the lump sum. The calculator lets you slide the commutation percentage up and down so you can see the trade-off for your own numbers rather than guessing.
Why GAD factors matter to your pension
GAD factors matter because they decide, in hard cash, how much you sacrifice for any lump sum beyond the automatic one. On AFPS 15 every pound of annual pension you commute is gone for good, replaced by twelve pounds today. A small change in how much you commute can mean thousands of pounds of difference over a long retirement, so understanding the factor is not an academic exercise, it is the difference between a comfortable decision and a regretted one.
The factors also matter because they are reviewed periodically rather than fixed forever. Actuarial factors reflect assumptions about how long people live and the value of money over time, and when those assumptions are updated GAD can revise the tables. The headline AFPS 15 commutation rate has been 12:1 and the legacy schemes use their published age-banded tables, but the existence of reviews is the reason a quote you saw years ago may not be the quote you get today. Always work from current figures when you are close to a real decision.
Finally, GAD factors matter for fairness and consistency. Because one independent department sets the rules for everyone, two members in identical circumstances should receive identical treatment, whatever their unit or branch. That consistency is a genuine strength of the system, but it also means there is no negotiating and no special case. The factor that applies to you is the published factor for your scheme and, on the legacy schemes, your exact age, full stop.
Tax treatment of the cash GAD factors produce
The lump sums that commutation produces are normally paid free of income tax, which is a large part of why people commute in the first place. Swapping taxable pension income for tax-free cash can look attractive, especially for anyone who expects to be a higher-rate taxpayer in retirement. That tax advantage is set by HMRC rules, not by GAD, but it is the backdrop against which the GAD factor is judged, because the real comparison is tax-free cash now against taxed income later.
There are limits, and they are HMRC limits rather than GAD ones. On AFPS 15 you can commute up to 25 per cent of the capitalised value of your pension benefits, which is why the scheme caps commutation at a quarter of your pension. The automatic three times lump sum on AFPS 75 and AFPS 05 is also paid tax-free within the normal allowances. Where the GAD factor and the tax rules meet is the point you actually feel in your bank account, so it is worth keeping the two ideas separate in your head: GAD sets the exchange rate, HMRC sets how much can pass tax-free.
This site provides estimates and education, not regulated financial advice, and tax outcomes can depend on your wider income and allowances. If a commutation decision is large enough to change your tax position, that is exactly the point to take proper advice from a regulated financial adviser and to get an official forecast before you commit.
Common misunderstandings about GAD
The most common mistake is assuming the AFPS 15 12:1 commutation factor applies to the legacy schemes as well. It does not. AFPS 75 and AFPS 05 already give you an automatic three times lump sum, and any extra commutation on those schemes uses GAD's age-banded tables, not a flat 12:1 rate. Quoting the 15 factor against a 75 pension will give you a figure that is simply wrong.
A second misunderstanding is thinking GAD will work out or send you a personal figure. It will not. GAD publishes general tables; your personal numbers come from Veterans UK on an official forecast, form 12 if you are still serving or form 14 if your pension is preserved. If you want a figure you can rely on for a real decision, that is the route, not the GAD website.
A third trap is treating a commuted pension as if only the cash matters. People focus on the lump sum and forget that the reduction to their annual pension is permanent and compounds over a long retirement, because the smaller pension is the one that then rises with inflation each year. The factor tells you the swap rate, but it does not tell you whether the swap suits your life. Reading 12:1 as a generous deal, when it is really only twelve years of income paid up front, is the error that costs people the most.
How to check your own position
Start by working out which scheme or schemes you are in, because that decides which GAD rules touch your pension. If you joined before April 2015 you may have legacy service in AFPS 75 or 05 as well as AFPS 15 service from April 2022 onwards, and the McCloud remedy may give you a choice over the period from 1 April 2015 to 31 March 2022. Knowing your scheme mix is the foundation for everything that follows, because a 12:1 commutation on your AFPS 15 pot behaves quite differently from optional commutation on a legacy pension.
Next, use the calculators on this site to get a feel for the trade-offs. The AFPS 15 tool models the fixed 12:1 commutation precisely and lets you test different commutation percentages up to the 25 per cent cap, so you can see your reduced pension and your lump sum side by side. For the legacy schemes the calculator models the automatic three times lump sum, because optional resettlement commutation needs the full age-banded GAD tables and your exact age, which only an official source can apply accurately.
When you are close to a real decision, request an official forecast from Veterans UK and, for anything significant, speak to a regulated financial adviser who understands public service pensions. The calculator gives you a confident starting point and helps you ask the right questions, but the binding figures come from the official forecast that applies the current GAD factors to your actual record.
How GAD relates to other AFPS terms
GAD sits at the centre of a small cluster of pension terms that are easy to muddle. The commutation factor is the headline output of GAD's work for serving and retiring members, the 12:1 figure on AFPS 15 being the one most people meet. Commutation itself is the act of swapping annual pension for a tax-free lump sum, and the factor is simply the exchange rate that GAD sets for that swap.
Early Departure Payments are the next term in the family, paid to qualifying early leavers below pension age, with a tax-free lump sum and a bridging income. On AFPS 15 the EDP lump sum is 2.25 times the preserved pension, and the figures behind EDP draw on factors GAD reviews. Index-linking is the partner idea that softens the impact of commutation, because the reduced pension you keep still rises broadly with prices each year, with pensions in payment rising 3.8 per cent from April 2026.
Finally, GAD connects to the McCloud remedy and to the idea of a deferred member. Members with remediable service from 2015 to 2022 choose between their legacy scheme and AFPS 15 for that period, and the relative value of each option can hinge on how the lump sum and commutation rules differ, which traces back to GAD's factors. If you only remember one thing, let it be this: GAD sets the rules, Veterans UK applies them to you, and the calculator on this site helps you see the shape of the decision before you ask for the official figures.