How the armed forces pension is calculated

Two engines: final salary and CARE

Before the individual formulas, it helps to know there are only two engines under the bonnet. AFPS 75 and AFPS 05 are both final-salary schemes: your pension is a percentage of your pay near the end of your career, multiplied up by the years you served. AFPS 15 is a career average (CARE) scheme, which builds your pension from a slice of every single year's pay rather than one figure at the end. If that split is new to you, final salary vs CARE sets it out in full.

The practical upshot is that final salary rewards your final rank and length of service, while CARE rewards every year you serve. A late promotion lifts a whole final-salary pension, because the higher pay is applied to all your years, whereas under CARE it only lifts the years you were actually on that pay. Here is how the three sit side by side before we work through each in turn.

AFPS 75: representative pay and the 48.5% ceiling

AFPS 75 does not use your actual salary. It works from a representative pay rate for your final rank, so two people leaving at the same rank with the same service normally get much the same pension. Accrual runs to a maximum of 48.5% of that representative pay over a full career, which is 34 years for officers (from age 21) and 37 years for other ranks (from age 18). The pension builds in a straight line towards that ceiling, so each year is worth 48.5% divided by the maximum years.

Take an officer on a representative pay of £47,000 who serves the full 34 years. The fraction is the whole 48.5%, so the annual pension is £47,000 times 0.485, which is £22,795 a year. On top of that comes an automatic tax-free lump sum of three times the pension, or £68,385. Leave halfway to the ceiling, at 17 years, and the fraction halves to 24.25%, giving £11,397.50 a year and a lump sum of £34,192.50.

AFPS 75 pays this as an Immediate Pension once an officer has 16 years' service from age 21, or an other rank has 22 years from age 18. Leave before that point and the pension is preserved to age 60 instead. The figure is flat until age 55, when all the inflation since you left is applied in one go, and CPI increases follow each year after that.

AFPS 05: 1/70th for every year

AFPS 05 keeps the final-salary idea but uses a cleaner formula and your final pensionable pay rather than a rank-based rate. You earn 1/70th of that pay for every year of reckonable service, and the total is capped at 57%, which you reach at 40 years.

Stay with a final pensionable pay of £47,000. Serve 21 years and the pension is £47,000 times 21, divided by 70, which comes out at exactly £14,100 a year, with the usual lump sum of three times that, or £42,300. Push on to a full 40 years and the raw sum would nudge past the ceiling, so it is capped at 57% of £47,000, giving £26,790 a year and a lump sum of £80,370.

The one catch compared with AFPS 75 is the normal pension age of 65 rather than 60, so an AFPS 05 pension left preserved is paid five years later. An Early Departure Payment can bridge that gap for those who leave at age 40 or over with at least 18 years' service.

AFPS 15: banking 1/47th and revaluing it

AFPS 15 throws out the single final figure. Each scheme year (1 April to 31 March) the MOD works out 1/47th of that year's pensionable earnings and adds it to a running pot. There is no maximum number of years, and the pot is revalued every year so it keeps its value rather than being frozen at the pay you were on when you earned it.

The MOD's own example makes it concrete. In year one you earn £47,000, so £47,000 divided by 47 adds £1,000 to the pot. In year two you earn £47,500, which adds £1,010, and the year-one slice is uprated too, by £20 in this example (a 2% inflation uplift). The pot is now £1,000 plus £20 plus £1,010, which is £2,030. Repeat that across a career and the pot is the sum of every year's 1/47th, each kept in line with earnings while you serve.

Because that yearly uplift tracks earnings while you are serving, entering your current pensionable pay gives a fair estimate of the whole pot: £47,000 divided by 47 is £1,000, so 20 years works out at roughly £20,000 a year. Once you leave, or the pension comes into payment, the revaluation switches from earnings to CPI instead.

The lump sum: automatic three times, or commuted cash

The lump sum is where the schemes part company most sharply, and it gets its own full treatment in the lump sum explained. AFPS 75 and AFPS 05 both hand you an automatic tax-free lump sum of three times your annual pension, with nothing given up to get it. That is why the AFPS 75 officer above collected £68,385 alongside their £22,795 pension, and the AFPS 05 example took £42,300 alongside £14,100.

AFPS 15 has no automatic lump sum at all. If you want tax-free cash you create it by commuting, which means surrendering some annual pension in exchange. The rate is fixed at 12 to 1: every £1 of yearly pension you give up buys £12 of lump sum, up to an HMRC limit of 25% of your total benefits. Give up £1,000 of pension and you take £12,000 in cash, but that £1,000 is gone from every future year, and the reduction is permanent.

Pension age and indexation

Two more things decide what actually lands in your account: when the pension is paid and how it grows once it is. AFPS 75 has a normal pension age of 60, AFPS 05 sits at 65, and AFPS 15 is 60 for an immediate pension. A deferred AFPS 15 pension is instead tied to your State Pension age, and can only be drawn earlier (from age 55) with a permanent actuarial reduction.

Indexation is the quiet part that adds up over decades. An AFPS 75 Immediate Pension stays flat until age 55, then catches up all the inflation since you left in one step and rises with CPI after that. AFPS 05 and AFPS 15 pensions in payment are CPI-linked too. The current uprating is 3.8% from April 2026, the figure a calculator applies to bring older awards up to date.

What a calculator does with your figures

A calculator cannot hold the MOD's rank-by-rank representative pay tables, so for AFPS 75 it uses the pay you enter as a stand-in for the representative rate and says so on screen. For AFPS 15 it leans on the fact that in-service revaluation tracks earnings, so your current pensionable pay times your years, divided by 47, is a sound estimate of the pot without needing a true year-by-year history.

That makes the army pension calculator genuinely useful for seeing how your figures stack up, but it is an estimate, not an official quote. This site is independent and not affiliated with the MOD, Veterans UK or JPAC, and nothing here is regulated financial advice. For a figure you can act on, ask Veterans UK for a forecast (form 12 if you are serving, form 14 if you hold a preserved pension), which reflects your real service record and any McCloud remedy position that a general tool cannot fully reproduce.