Plain-English guides to the Armed Forces Pension Scheme: the schemes, the McCloud remedy, commutation, Early Departure Payments and more.
How the three armed forces pension schemes work and which one you're in.
Read moreWork out which armed forces pension scheme you are in, AFPS 75, 05 or 15, by your join date, plus what the 2022 move and McCloud remedy mean.
Read moreHow commutation works on the armed forces pension: swapping guaranteed yearly income for a tax-free lump sum, GAD commutation factors, the AFPS 15 limits, and whether it is worth it.
Read moreShould you commute your armed forces pension for a bigger lump sum? Weigh the tax-free cash against the guaranteed, index-linked income you give up for life.
Read moreHow the Early Departure Payment works on AFPS 05 and AFPS 15: who qualifies, the tax-free lump sum, the monthly income, the tax, and how it bridges you to pension age.
Read moreHow an armed forces pension is split on divorce: pension sharing orders, the cash equivalent value, and how AFPS 75, 05 and 15 benefits are valued.
Read moreWho gets an armed forces survivor pension and how much: spouse, partner and child benefits, the lump sum death benefit, and how each scheme pays out.
Read moreHow the armed forces ill-health pension works after a medical discharge: the tiers, enhanced service, the lump sum, and how Veterans UK assess your award.
Read moreWhat a preserved armed forces pension is, when you can claim it (age 60 or 65), and how it is revalued each year until you draw it.
Read moreYour armed forces pension is one of the most valuable things you earn in service, yet it is also one of the least understood. The rules changed in 2005, again in 2015, and once more in 2022, so most people who have served any length of time now hold benefits in more than one scheme and carry a McCloud remedy choice on top. These guides exist to turn that tangle into something you can actually use, written in plain English by people who have read the scheme rules so you do not have to. Each guide goes deep on one topic; this page is the map that shows how they fit together and which one to open first.
A word on what this site is. We are an independent education resource. We are not affiliated with the Ministry of Defence, Veterans UK or JPAC, and nothing here is regulated financial advice. The figures in these guides are estimates to help you understand how the schemes work and to ask sharper questions. For an official forecast you request a quote from Veterans UK, using form 12 if you are still serving or form 14 if you hold a preserved pension. Use our guides and calculators to get the shape of the decision, then confirm the specifics with that official forecast, and for the bigger, irreversible calls take regulated advice as well.
There are three armed forces pension schemes, and the one your service was built in decides almost everything else: how much you get, when you can draw it, and whether you receive an automatic lump sum. Your starting scheme is set mainly by when you first joined the Regular forces, but from 1 April 2022 everyone still serving builds new pension in AFPS 15 whatever scheme they began in. That is why a long career usually ends up as two slices stitched together, an older final-salary slice and a newer career-average slice, each paid under its own rules.
AFPS 75 is a final-salary scheme built on the representative pay for your final rank rather than your exact salary, so two people of the same rank and service generally retire on much the same pension. Build-up runs to a maximum of 48.5% of final pensionable pay over a full career, which is 34 years for officers and 37 years for other ranks. It pays an automatic tax-free lump sum of three times your annual pension, and its normal pension age is 60. For a complete career it is generally the most generous of the three.
AFPS 05 is also final-salary, but the maths is simpler to picture. You earn 1/70th of your final pensionable pay for every year served, building up to around 57% of final pay over a long career, again with an automatic tax-free lump sum of three times the annual pension. The big difference from AFPS 75 is the normal pension age, which is 65 rather than 60, so a preserved AFPS 05 pension is paid later if you leave early. To bridge that gap, AFPS 05 carries an Early Departure Payment for qualifying leavers.
AFPS 15 is a different animal. It is a career-average scheme, written CARE, which stands for Career Average Revalued Earnings. Each year the scheme banks 1/47th of that year's pensionable pay into a running pot and revalues it so it keeps its value against inflation. There is no automatic lump sum, so if you want tax-free cash you commute up to 25% of your pension at a fixed rate of about 12 pounds for every 1 pound of yearly pension you give up. Its normal pension age tracks your State Pension age, with an Early Departure Payment available from age 40 for those who qualify. The later pension age is the main reason people feel AFPS 15 is less generous, though its 1/47th build-up is strong for a public-service scheme and it rewards every year served rather than just your finishing rank.
Commutation means giving up part of your annual pension in exchange for a larger tax-free lump sum on the day you draw your benefits. It matters most on AFPS 15, which has no automatic lump sum, so commuting is the only way to create tax-free cash on that scheme. The rate is set by a commutation factor: a factor of 12 to 1 means every 1 pound of yearly pension you surrender turns into about 12 pounds of cash. As a broad benchmark a factor above roughly 20 to 1 is generally considered good value, so the fixed AFPS 15 rate of about 12 to 1 sits well below that, which is a strong argument for commuting only what you genuinely need rather than the full 25% out of habit.
The legacy schemes work differently. AFPS 75 and AFPS 05 already pay that automatic lump sum of three times the pension, and on top of it they allow resettlement commutation for extra cash using age-banded factors published by the Government Actuary's Department. The key point on any scheme is that commutation is permanent and irreversible: every pound of lump sum comes straight out of a guaranteed, inflation-linked income you would otherwise have drawn for life.
Here is an illustrative example; the figures are round numbers chosen to keep the arithmetic clear, not a quote for your pension. Suppose a member on AFPS 15 has a yearly pension of 10,000 pounds and decides to commute the full 25% allowed. Giving up 25% means surrendering 2,500 pounds of yearly income. At the fixed rate of about 12 to 1, that 2,500 pounds is multiplied by 12 to produce a tax-free lump sum of 30,000 pounds, and the pension that remains in payment is 10,000 minus 2,500, which is 7,500 pounds a year. So the trade is a 30,000 pound tax-free sum now in exchange for 2,500 pounds a year less, every year, for the rest of the member's life. On a rough cash basis the lump sum is worth about twelve years of the income you gave up before you even count the inflation rises you also forfeit, for example the 3.8% uprating from April 2026. The longer you live, the more that income would have added up to.
The Early Departure Payment, or EDP, supports people who leave before their normal pension age but with enough qualifying service behind them. It pays a tax-free lump sum on the way out, plus a monthly income that runs until your scheme pension comes into payment at pension age. Think of it as a bridge across the years between leaving and pension age, not a replacement for the pension itself, which is still calculated separately and paid in full on top from pension age onward. The EDP exists on AFPS 05 and AFPS 15 only; AFPS 75 handles early leaving through its own Immediate Pension and resettlement arrangements instead.
Both versions set a service test and an age test, and you have to clear both. On AFPS 05 you broadly need at least 18 years' service and to be at least age 40. On AFPS 15 the bar is broadly 20 years and again at least age 40, often called the 20/40 point. On AFPS 15 the EDP lump sum is 2.25 times your preserved pension, with the monthly income a percentage of that same pension. The lump sum is tax-free, but the monthly EDP income is taxable as earned income, so if you start a civilian job the two stack up and are taxed together. If you just miss the EDP test you usually keep a preserved pension instead, held for you and payable later at your scheme's normal pension age, with no bridging income in the gap years, which is exactly why being a few months short can change the outcome completely.
When AFPS 15 came in during 2015, the government moved younger members across but let those closer to retirement stay in their legacy scheme for a while longer. The courts ruled in the McCloud and Sargeant cases that protecting people by age in this way was unlawful age discrimination, and the fix is what everyone now calls the McCloud remedy. The remedy period runs from 1 April 2015 to 31 March 2022. If you were serving and affected during any of that window, you get a choice for those years: take the benefits you would have had under your legacy scheme, AFPS 75 or 05, or take AFPS 15 benefits instead.
You do not have to decide blind. Veterans UK provides a Remediable Service Statement that sets out your figures calculated both ways so you can compare like for like. For most people the choice is deferred, which means you make it at the point you actually draw your pension, when your final pay and circumstances are known and the comparison is sharper; those already retired or very close to it get an earlier choice. There is no single right answer. Late promotion tends to favour the final-salary legacy schemes, because a high finishing pay lifts all of your remedy-period service, while a flatter pay history can make the career-average basis competitive, and your leaving age and tax position both come into it. The choice is a one-off and irreversible once made, so for anything close it is worth taking regulated advice and relying on the figures in your official statement.
The guides above are built as a small map rather than a pile of articles. At the centre sit the schemes, because almost every other decision depends on which scheme your service was built in. From there the guides branch into the two things people most often need to decide, how to take their benefits and how to handle the 2015 to 2022 window.
Read in that order, the guides take you from "which scheme am I in" to "what will I get and when" to "what do I choose for the remedy years", which is the natural sequence of questions almost everyone works through.
You do not need to read everything. Pick by where you are in your service and what decision is in front of you.
Whatever you read here, the order to follow is the same. Fix your dates first: when you joined, any break in service, and whether you have ever transferred pension in, because those three things explain almost every case where the simple rules do not hold. Next, pull your most recent annual benefit statement and read off the scheme or schemes it lists. Then, for any real decision, request an official forecast from Veterans UK using form 12 if you are serving or form 14 if you hold a preserved pension, and wait for those figures before you commit. An estimate is fine for planning; it is not the number to resign on, and a Remediable Service Statement, not any calculator, is the binding document for your remedy-year figures.
Sources:gov.uk, Armed forces pensions & Understanding your armed forces pension · Discover My Benefits (MOD) · Forces Pension Society · MoneyHelper · GAD commutation factors. These guides give estimates only and are not regulated financial advice.