§ Lord Morris of Manchester
asked Her Majesty's Government:
What is the current cost to individual members of the Armed Forces pension scheme of the benefits it confers; and when and by how much the cost to them has changed since the scheme was introduced; and [HL5317]
What will be the cost to individual members of the Armed Forces pension scheme of the planned improvements to the scheme due to take effect in 2005. [HL5318]
§ Lord Bach
There has been no direct cost to individual members of the Armed Forces Pension Scheme for the benefits that the scheme confers since the current scheme was introduced in 1973. The scheme is non-contributory for members, with the cost of benefits being met by the Ministry of Defence.
While members make no direct contribution, the Armed Forces Pay Review Body (AFPRB) compares the overall remuneration of the Armed Forces with that offered by comparator civilian employers. The AFPRB currently makes a 7 per cent abatement of the pay of civilian comparators to take account of the extent to which AFPS benefits are better than those of civilian comparators. This abatement has varied over time depending on the outcome of the AFPRB's comparisons. The abatement does not equate to the cost of providing pension scheme benefits.
As with members of the current AFPS, members of the new AFPS will not make a direct financial contribution. The next valuation of the AFPS by the AFPRB is scheduled for the 2006 report. It would not be appropriate to forecast what the AFPRB may decide on the comparative value of the scheme. As an independent review body, they will reach their own decision on this matter.