Guidance

Bonus scheme guidance

Published 27 August 2010

Armed forces pension scheme 2005 Guidance

Bonus Scheme for MO/DOs under AFPS 05 (updated September 2007)

Personnel in certain specialisations (for example MO/DOs) are on bonus arrangements, which replace the entitlement to EDP. Further details can be found in the directed letter.

Transferring to AFPS 05 and bonus payments

Personnel who transferred to AFPS 05 will be eligible for bonus payments. Those who remain in AFPS 75 will continue to be eligible for an Immediate Pension (IP). All bonus payments are taxable.

You can only join AFPS 05 if you leave the UK Armed Forces with a break of more than 30 days. Less than 30 days is classed as continuous service and you would have to rejoin AFPS 75.

What return of service is required after receiving a bonus?

All bonus payments require a five-year return of service. If you fail to complete the return of service the whole of the bonus sum will have to be repaid.

Bonus eligibility

if you have passed the bonus payment point when you transferred to AFPS 05 you are not eligible for the bonus. If you have passed a bonus payment point before 6 April 2006 then you would not receive that bonus payment.

Failure to complete the return of service because of redundancy or medical discharge

If this happened before the EDP 18/40 Point (the point at which an individual reaches age 40 and served at least 18 years) the bonus would not be recovered.

If this happened after the EDP 18/40 Point, you would be given access to the EDP arrangements. The MOD would normally seek to recover the bonus from the EDP lump sum that you would receive. However, these cases would be dealt with individually and judgements made according to the particular circumstances.

In the event of your death before completing the 5-year return of service period, the MOD would waive the requirement to repay the bonus.

Extension to “short commissions”: how this affects bonus payments

“Short commissions” includes British Army and RAF short service commissions, Royal Navy short career commissions and CTOS short commissions.

The extension that you have been granted forms part of your commission. If you are accepted for transfer to a “medium commission” (and you are a GMP or GDP) you will be eligible for the first bonus payment at the end of your “short commission” (including any extension period granted) as long as this is after 6 April 2006.

The date of transfer to a “medium commission” does not affect this bonus payment point.

If you have already received a Commission Transfer Grant (CTG) before transferring to AFPS 05, the bonus payment which you would receive at the end of your SCC will be reduced by the amount of CTG already received.

Medium commissions

“Medium commissions” includes Royal Navy medium career commission, British Army intermediate regular commission, RAF 16/38 commission and the CTOS medium commission

If your “Medium Commission” ended before 6 Apr 2006 but your training return of service obligation does not end until after 6 Apr 2006. You are eligible for the bonus associated with the end of the “medium commission” even if you are now on a “full commission”.

The “medium commission” bonus (first bonus for secondary care consultant group, second bonus for primary care group) is paid at the end of the “medium commission” period and after any training return of service has been met, whichever is the later. Thus those currently serving personnel who transfer to AFPS 05 will qualify for the bonus if the payment point, as described above, falls after 06 April 2006 even if they are already transferred to a longer commission.

Paragraph 8 of the Bonus IC Brief (DMSD05/2004) is potentially misleading on this point as it does not specifically refer to the requirement for training return of service to have been met before a bonus would be paid. However paragraph 4 of the same document does make clear that the bonus payment is - paid at the end of the “medium commission” period, and after any training return of service has been met, for those who transfer to a “full commission” .

This applies to both secondary care and primary care groups.

If you have not reached the end of your previous commission before 6 April 2006 but have already transferred to a longer engagement, you will be eligible for the bonus payment at the point where the original commission would have ended, and after any training return of service has been met (if applicable) if this is after 6 April 2006.

Transferring from a “short” to “full commission”

If you have not reached the end of what would have been the “medium commission”, you will be eligible for the “medium commission” bonus at the end of whatever “medium commission” (plus any training return of service if applicable) you could have been offered when you transferred from your “short commission”.

If you transferred prior to 01 April 2003 (introduction of CTOS) you could only have been offered a pre-CTOS “medium commission” (MCC/Intermediate Reg C/16/38 Commission) and you will be eligible for the “medium commission” bonus at your 16/38 point and after any training return of service (if applicable), if this is after 6 April 2006.

However had you transferred after 1 April 2003 you could only have been offered a CTOS Medium Commission, which is service to the 18/40 point. Therefore you will be eligible for the “medium commission” bonus at your 18/40 point and after any training Return of Service (if applicable), if this is after 06 Apr 06.

Fulfilling 5-year return of service before retirement

If you reach the bonus payment point but are unable to fulfil the 5-year return of service before normal retirement age you will not be eligible to receive a bonus payment.

Retirement ages

If you leave after age 55 but before age 58, retirement ages will continue to be tied to service career structures. You will receive your pension at the retirement age to which you have agreed.

If you leave before this, you will have your pension paid immediately if you are age 55 or over. If you are younger than age 55, you will not receive anything on departure but will have a preserved pension and pension lump sum payable at age 65. If you have failed to give the required 5 years return of service on a bonus payment, you will have to repay it.

NHS pension scheme

If you were in the NHS pension scheme before joining the armed forces, you would have to request that your NHS pension be transferred in to your armed forces pension scheme (you have to do this within one year of joining the Armed Forces scheme).

The transfer of these benefits involves crediting you with an amount of qualifying service and reckonable service (measured in years and days) equal in value to the transfer value paid by the previous scheme. Transfer values are calculated on an individual basis in accordance with actuarial guidance and the requirements of pensions legislation. Further details can be found in the Tri-Scheme pensions Booklet “Transferring Benefits” – MMP/129.