Final salary vs CARE pensions explained

What final salary actually means

Final salary means what it says: the size of your pension is set by your pay near the end of your career, multiplied out across the years you served. On AFPS 05 the sum is clean. You earn 1/70th of your final pensionable pay for every year of reckonable service, so twenty years gives you twenty seventieths, and the total builds towards a ceiling of 57% of final pay reached at 40 years. Whatever you are earning when you leave sets the value of every year you put in.

AFPS 75 works on the same final-salary principle but with a twist. Rather than your exact salary, it uses a representative pay rate for your final rank, so two people who leave at the same rank with the same service normally draw much the same pension. It builds towards a maximum of 48.5% of that representative pay over a full career, which is 34 years for officers and 37 years for other ranks (officers at OF-7 and above are priced on their final earnings instead).

The common thread is that a final-salary pension does not care what you earned in the middle of your career, only where you finished. Both older schemes also pay an automatic tax-free lump sum of three times the annual pension, which lands without you giving anything up. If you want the underlying arithmetic, the how the armed forces pension is calculated guide walks through the sums.

What career average (CARE) means

Career Average Revalued Earnings, mercifully shortened to CARE, throws out the idea of a single final figure. Under AFPS 15 the MOD banks 1/47th of that year's pensionable pay into a pot at the end of each scheme year (1 April to 31 March). Every year you serve adds its own slice based on what you actually earned that year, and it accrues from your first day of paid service with no maximum number of years.

The obvious worry with averaging a whole career is that money earned in year one is worth less by year twenty, so CARE revalues the pot to keep its value. While you are serving, each year's slice is uprated in line with earnings (the Average Weekly Earnings index, which added 3% in 2018), and once you have left or drawn it, the pot rises with CPI. The official worked example makes it concrete: £47,000 earned in year one gives a £1,000 slice; a year later, £47,500 gives a £1,010 slice, and with a 2% inflation uplift on the first year the pot reaches £2,030.

CARE also pays out differently at the back end. There is no automatic lump sum, so for tax-free cash you commute (surrender) some annual pension at a fixed rate of £12 of lump sum per £1 of yearly pension given up, capped by HMRC at 25% of your benefits. Its normal pension age is 60, with an Early Departure Payment available from age 40 for those who reach 20 years' service.

Who has final salary and who has CARE

Which method applies to you comes down to when you first joined the Regular forces. Join before 6 April 2005 and you started on AFPS 75. Join between 6 April 2005 and 31 March 2015 and you began on AFPS 05. Join on or after 1 April 2015 and you went straight into AFPS 15, the CARE scheme, from day one.

So the two final-salary schemes belong to anyone who signed on before April 2015, while CARE is the scheme for everyone who joined after that and, from 2022, for everyone still serving. If you are not certain where you fall, the which scheme am I in guide sets out the dates and the wrinkles that bend the simple rule, such as breaks in service and rejoining.

Final salary vs CARE at a glance

Side by side, the two approaches contrast on almost every feature that matters, from how the pension is built to when you can draw it. The table below sets out the headline rules for each, using the figures published for the schemes.

A word of caution: this is a like-for-like comparison of the rules, not a verdict. Which one leaves you better off depends entirely on your own career shape, which the next two sections unpick.

The strengths and weaknesses of each

Final salary's great strength is that it prices your entire pension off your best pay, so anyone promoted late in their career sees every earlier year revalued up to that final level. A soldier who makes a big rank jump in their last few years effectively drags decades of service up to the new pay rate. The automatic three-times lump sum is a genuine perk too, arriving without you having to trade pension for it.

The flip side is that final salary is unkind to flatter careers and to anyone whose pay peaks in the middle rather than at the end. If you never reach the top rank, or you step back late on, your whole pension is anchored to that modest final figure however long you served. AFPS 05's normal pension age of 65 is also later than the others, so a preserved AFPS 05 pension can sit waiting longer than an AFPS 75 one, which pays from 60.

CARE turns those trade-offs around. Because every year is banked on its own pay and revalued, a long, steady career is rewarded fairly rather than held hostage to the final rank, and there is no cap on the years you can build. The cost is the loss of the automatic lump sum and, for younger members, a value that leans on inflation-linked revaluation keeping pace rather than on one generous final multiplier.

Why the government moved everyone to CARE

The move to CARE was not really about the maths; it was about fairness and cost. Final-salary schemes across the public sector were seen as expensive and skewed towards high-flyers, because the biggest pensions went to those who climbed furthest by the end. Career average spreads the reward more evenly and is more predictable to fund, which is why the government closed the older schemes to new build-up.

AFPS 15 opened to new joiners in April 2015, but members closer to retirement were allowed to stay in their legacy scheme for a while. The courts found in the McCloud and Sargeant cases that protecting people by age like that was unlawful discrimination, and the fix, the McCloud remedy, is why the final switch happened on 1 April 2022. From that date everyone still serving builds new pension in AFPS 15, whatever scheme they began in.

For the remedy period of 1 April 2015 to 31 March 2022, affected members get to choose whether those years are treated as legacy final salary or as AFPS 15 CARE, whichever pays better for them. That choice is usually made when you draw your pension, and Veterans UK provides the figures calculated both ways so you can compare.

What it means for a career that spans both

If your service straddles April 2022 you do not sit neatly in one camp: you hold a final-salary slice for the years before the switch and a CARE slice for everything after. Someone who joined in 2000 on AFPS 75, for example, carries final-salary rights up to 2022 and has been banking 1/47ths in AFPS 15 ever since, so their eventual statement reads like two schemes stitched together.

Crucially, the older slice is not frozen at the 2022 changeover. Benefits built in AFPS 75 or AFPS 05 are accrued rights, protected and paid under their own scheme's rules, and they stay linked to your pay and rank at the point you actually leave. So late promotion still lifts your final-salary slice even though you stopped adding to it years earlier, which is one of the quieter advantages of a long career.

The practical upshot is two pots with different pension ages and different lump-sum rules to keep track of. You can model both together with our armed forces pension calculator to see roughly how the final-salary and CARE parts stack up before you request an official forecast.

Which is better for you

There is no scheme that is better in the abstract; there is only the one that suits your career. As a rough steer, final salary tends to favour those promoted late or who reach a high final rank, because the whole pension is priced off that peak. CARE tends to favour steady careers and long service, because it counts every year on its own merits and never caps the years.

Where it matters most is the McCloud remedy years, since that is the one window where you actively choose between the two methods. Do not decide it on instinct: the sums can go either way, and tax and your exact final pay both feed in. Veterans UK issues a Remediable Service Statement with the figures calculated both ways, and for a call this size that statement is the number to trust.

This site is independent and not affiliated with the MOD, Veterans UK or JPAC, and the figures here are estimates rather than regulated financial advice. Use the calculator to understand how your final-salary and CARE benefits are built and to ask sharper questions, then confirm anything you plan to act on with an official forecast, and take regulated advice for the bigger decisions.