Select Committee on Defence Second Report



153. The AFOPS's goal on resettlement of military personnel is 'to provide all Service leavers with a modern resettlement system, to assist them in making a successful transition to civilian life, which meets as cost-effectively as possible the needs of both the Services and the individual'.[279] In this inquiry we have focused mainly on measures to attract people into the Armed Forces and encourage them to remain rather than on provision made for them once they leave. However, in today's competitive job market, potential employees look at the whole 'package' on offer to them, and the Services' ability to facilitate a smooth transition to a second career and civilian life, with at least adequate pension provision, will add to the attractions of a Service career. There is of course also an overriding moral duty on the Services to continue to address the needs of those who have served their country.

154. We have discussed earlier in this report the value of offering accredited qualifications as a retention incentive. Their benefit is beyond question for Service personnel coming to the end of their service and seeking civilian employment. Our recommendation that the Services make rapid progress in establishing an effective accreditation system will therefore have significant benefits for veterans.


155. All members of the Armed Forces automatically become members of the Armed Forces Pension Scheme (AFPS).[280] The Armed Forces' Pay Review Body (AFPRB) takes account of pension provision in considering the broad comparability of remuneration with the civilian sector; and although it is a non-contributory scheme the AFPRB applies an abatement in calculating salaries to take account of the deferred pay which early pension payment represents: the abatement is currently 7 per cent.[281] The AFPS, like the Civil Service but unlike most private sector schemes, does not have a fund: the benefits are paid from Annually Managed Expenditure in the MoD's Vote. Gross expenditure on the scheme is estimated at £2,257million in 2000-01 rising to £2,727 by 2004-05.[282]

156. There are long-term questions surrounding the whole future of Armed Forces' pensions. The financial statistics relating to the costs of the AFPS require careful analysis, but on one interpretation they can be shown to have doubled as a proportion of personnel costs, and are expected to reach around one-third of total uniformed personnel costs by 2002-03.[283] While AFPS payments are regarded as Annually Managed Expenditure, they do not impinge on the MoD's Departmental Expenditure Limits which have to bear its main defence expenditures. The MoD do make a contribution out of its DEL budget towards the AFPS payments, but these payments reflect a proportion of the future pension liabilities for servicemen currently in post rather than of currently paid pensions for ex-servicemen. We have sought from the MoD predictions of future trends in pensions liability for its defence budget, but these are so hedged about with caveats and qualifications as to offer little basis for worthwhile projections. Nonetheless, we look forward to the review of pensions, the report of which is expected shortly, to come up with some clear assessment of future liability and ways of using the funds most cost-effectively.

157. The main benefits of the AFPS are—

      (a)  Immediate pension for officers at age 38 or after 16 years' service and at age 40 for other ranks or after 22 years' service. Reckonable service begins at age 21 for officers and 18 for other ranks.

      (b)  Full pension payable at age 55 based on 34 years' service for officers and 37 for other ranks

      (c)  Death in service lump sum for spouses of 1-1½ times pay plus 50 per cent of ill-health pension

      (d)  Death in retirement pension for spouses of 50 per cent of the pension the member was receiving at the time of death.[284]

158. The review of the Armed Forces Pension Scheme was announced in the Strategic Defence Review and the process started in the autumn of 1998.[285] The intention was that the review would take 'about a year'.[286] It has so far taken twice as long as envisaged and delays in making its findings known are continuing. In March 2000 the Minister for the Armed Forces announced that the review was 'scheduled to report during the summer' and the MoD confirmed this to us in evidence.[287] However, when we questioned the Minister in December about the likely timing of the conclusion of the review he was not able to give us a clear indication.[288] Some welcome improvements to the AFPS have been made whilst the review has been proceeding, most recently last October, when the rules were amended to allow widows and widowers receiving an attributable Armed Forces pension to keep it should they remarry or cohabit.[289] A parallel, and equally important, review of compensation arrangements for personnel injured or killed in service and their dependants has also been conducted and has also been inordinately delayed. The MoD's intention is to publish the outcomes of both reviews at the same time.[290]

159. The Officers' Pensions Society (despite its title) represents all those in receipt of an Armed Forces pension. The Society has submitted evidence to the government's review and take the view that 'the current Armed Forces Pension Scheme demonstrably falls well short of modern standards and contains several gross inequities which must be corrected'. It also considers that a flawed pension scheme will act as a disincentive to recruitment and retention.[291] There has been publicity recently about the predicament of Service personnel who retired in so-called 'trough' years when government pay restraints were in place, resulting in substantially reduced pensions for them in comparison with colleagues at the same rank and with the same years of service who retired before or after.[292]

160. We accept that pension schemes are complicated and that it is important that the review of the Armed Forces Pension Scheme is conducted thoroughly. However, the review has been in progress for more than two years now, which we believe is quite long enough. We expect the review findings to be published before the government replies to this Report.

161. We also hope that the review will be open to radical suggestions, particularly those tailored to meet the specific problems of each service. The Bett report, for example, suggested that the Armed Forces could significantly improve its ability to retain trained officers if the guarantee of pensions after 16 years service was removed, and the funds released used to increase pay. This, it was suggested, was a rational response to the high earnings potential of ex-RAF aircrew, particularly pilots. Quite other considerations apply to the other two Services, and such a system would not be appropriate to them. It is now much more difficult to get a regular commission in any of the Services but, once attained, officers know that they are guaranteed the security of a job for life or a pension from the 16-year mark onward. A decision to remove the early pension option would inevitably lead to compulsory ejection of many officers in mid-career from the Services. In many cases they would be hugely disadvantaged in starting fresh careers. The age at which regular commissions are now typically awarded (usually on conversion in the mid-20s, not on graduation from Sandhurst) is precisely the age range at which the Army in particular is already losing officers. This is another area in which we believe the 'one size fits all' approach of the overarching personnel strategy may cause unnecessary and inefficient restrictions on the ability of each Service to tailor its terms and conditions to its needs, and to its relative strength in the employment market.


162. The level of assistance provided for those leaving the Armed Forces depends on length of service. The standard package consists of guidance from specialist resettlement advisers on the rules for resettlement and the options available. Those with three to five years service also have access to a job-finding service provided by Career Transition Partnership (CTP), a joint venture between the MoD and Coutts Consulting Group plc, which includes the possibility of attending courses run by CTP 'if spare places exist'. The full resettlement package is offered to those with five or more years' service and those who are being medically discharged. This includes advice from a personal consultant on finding a suitable job; a three-day career transition workshop covering interview techniques, drawing up a CV and self-marketing; and the option to attend a variety of job-related courses to assist with such things as management and trade skills run by the Resettlement Training Centre at Aldershot.[293] The Royal British Legion Training College at Tidworth also provides training courses to Service leavers, as one of CTP's suppliers, in such subjects as information technology and management skills.[294] The MoD established a Veterans' Advice Unit in 1998, staffed by warrant officers, which provides advice to ex-Service personnel and their families on issues affecting them.[295] Much of its work involves guiding inquirers to other government agencies, such as the Department of Social Security, who can provide practical assistance with such matters as pensions and benefits.

163. The families' organisations believed resettlement provision has improved recently, but that more should be done for spouses, given that their commitment has supported the Service person, that they have often sacrificed their own career, and that returning to civilian life will affect both partners equally.[296] We recommend that 'resettlement' facilities are made available to spouses. The view of the naval families' association was that personnel would be greatly assisted if the principle that their last 12 months could be spent ashore, to enable them to take up the full range of resettlement provision, was honoured in practice.[297] Providing resettlement assistance to partners seems an obvious way in which the Services could show that they acknowledge the contribution which Service families make and would be evidence that the Armed Forces were responsible and caring employers.

164. The Royal British Legion provides ongoing assistance to ex-Service personnel, including advice and funding for those wishing to set up small businesses. The Legion is concerned that many personnel leaving the Services do not receive the training and advice from the Services for which they are eligible because they are not told about it or because operational demands prevent them taking up these opportunities. They wish the Services to make resettlement assistance an entitlement rather than a privilege, and to allow it to be taken up after discharge if workload makes this impossible before then. This seems sensible and we recommend that the MoD make resettlement training and advice an entitlement for Service personnel which should be available for up to 12 months after discharge.

165. Professor Dandeker emphasised the asset that ex-personnel could be to the Services in explaining the Armed Forces to those who have no experience of them and in maintaining the links between military and civilian society. As well as having a wider, cultural value for the Services, it would directly assist recruitment if those returning to civilian society represented examples of how well the Services treated their personnel and prepared them for a second career and the return to civilian life.[298] It is in the Services' own interests that those leaving the Armed Forces take a positive experience back to the civilian community. The Services need to do more to ensure this is the case and should draw on the knowledge and experience of organisations who work with ex-Service men and women, and therefore understand their problems, in further developing their resettlement package to meet the needs and expectations of those who have served their country.

166. Ex Service personnel also encounter problems with access to social housing after leaving the Forces. Under the Housing (Homeless Persons) Act 1977 as clarified by the Local Authority Joint Local Connection Agreement on 'Procedures for Referrals of the Homeless', where any person wishes to acquire local authority housing on grounds of homelessness, that homeless person and any person who might reasonably be expected to reside with him, has to prove a 'local connection' with the areas where it is desired to live. In the case of a Service person (in the priority category), being discharged from the Armed Forces and wishing to acquire local authority housing in areas in which the family is based, under current legislation the time spent in the Regular Armed Forces is explicitly excluded when proving 'local connection' for residence and employment.[299] Even if the legislation did not intend it, this situation would seem specifically to disadvantage an ex-Service person. Yet the location and duration of residence in any area is at the discretion of his Service's manning authority, and the Service person may during what might have been many months or years in a locality have made a significant contribution to the local civilian life. That a local authority may make its own decisions as to what 'special circumstances' may or may not apply in relation to establishing a local connection can and does result in Service personnel being treated differently by different local authorities and being treated differently from civilians.

167. One way to rectify those anomalies could be for a Service household which knows that it is to be discharged at a specific time and, being in the priority category, wishes to acquire local authority housing in the area of its current posting, to have the Service person's last 6 months of service explicitly included when proving 'local connection' for residence. Were that to happen however, all such Service households becoming homeless on discharge would have the current posting as the local connection, thus precluding a local connection elsewhere. Similarly, estranged families would have the current posting as the local connection. It is not known how many Service families are annually disadvantaged by the status quo nor how many would be disadvantaged if regulations were changed to the last 6 months' service's location being explicitly including as the local connection. Nonetheless, we would welcome an explicit statement of what is being done to address these problems by the MoD in conjunction with relevant other government departments.

168. The Soldiers, Sailors, Airmen and Families Association (known as SSAFA-Forces Help) provide practical help to personnel and their families after, as well as during, their service and therefore come into contact with those for whom the process has not been easy. They refer to one description of leaving the Services as being 'like stepping off a train. Once you get off, it is gone and no one wants to know'.[300] We have received evidence from Emmaus UK which indicates that the proportion of homeless people who have previously served in the Armed Forces could be as high as 25 per cent.[301] SSAFA, although accepting that a number of ex-Service personnel do become homeless, point to the need to be very careful in analysing the statistics. They, along with other ex-Service and voluntary organisations and the Services themselves, are working with the government on the Ex-Service Action Group which has undertaken a number of initiatives to tackle homelessness amongst former members of the Armed Forces.[302] This is an important area and we expect the MoD to provide us with an assessment of the scale of the problem and a policy statement in response to this Report.

Sick and injured veterans

169. Professor Strachan believed that the way the Armed Forces treated those who had suffered injury or ill health as a result of their service was crucial to the public image of the Services and that at present 'the MoD does not emerge from the press as a caring employer'.[303] This Committee and our predecessors have reported more than once on the specific circumstances affecting veterans of the Gulf War, most recently in April last year. In that report we drew attention to the 'debt of honour' which this government acknowledges is owed to those who have served their country in the Armed Forces. We welcomed the progress which had been made since 1997, and concluded that the government had gone some way to honouring its debt: but we felt more should be done to assist veterans with health care and financial provision and made recommendations accordingly.[304]

170. The issue of the treatment of sick military veterans is not going to go away. There have been recent reports of ill health amongst NATO military personnel who served in the Balkans. Some have ascribed this to contact with depleted uranium. In response, the government announced a voluntary screening programme for British personnel who believe their health has been adversely affected.[305] Veterans who believe they have been affected in such ways will no longer accept it as part of military life, if they were ever prepared to do that, and will increasingly resort to the media and to the courts to seek redress for the harm they believe has been done to them. A further problem, which is beginning to be better recognised, is the problem of mental illnesses (including post-traumatic stress disorders) arising from experiences in the Services or after discharge. These are complicated issues but, as we have commented before, the MoD has not in the past handled the issue of sick veterans with anything like the sympathy and concern which it should demonstrate.[306] That has been counter-productive, and the lessons learned have to some extent been applied. Everyone must accept that military service is not the same as other jobs, but this does not absolve the Services from acting as responsible and caring employers. If they do not, those they are seeking to recruit will reject them. Financial assistance is not the whole story in satisfying the legitimate needs of sick veterans but it is an important part. We hope that the outcome of the current reviews of pensions and of compensation which we have discussed earlier will ensure that the MoD is seen as moving closer to being the type of caring and effective employer we expect it to be.

279  AFOPS, p 54 Back

280  Ev p 241 Back

281  AFPRB Report 2000, para 84 Back

282  Ev p 242 Back

283  House of Commons Library Back

284  Ev p 241 Back

285  SDR Supporting Essay 9, para 56 Back

286  Letter from the Minister for the Armed Forces to the Officers' Pension Society, 22 September 1998 [not printed] Back

287  HC Deb, 22 March 2000, c 567w; Ev p 43, para 25.1 and Q 118 Back

288  QQ 771-774, 785 Back

289  HC Deb 31 October 2000, c 344w Back

290  HC Deb, 3 July 2000, cc 57-58w; Ev p 43 para 27.2 Back

291  Ev p 242 Back

292  Daily Telegraph, 4 January 2001; for details see Ev p 245 Back

293  Ev pp 48- 49, paras 34.2-34.4 Back

294  Ev p 237 Back

295  Ev p 49, para 35.1. Back

296  Ev pp 162, 165-166, 167 Back

297  Ev p 165 Back

298  Q 9 Back

299  SSAFA Back

300  Ev p 185 Back

301  Ev pp 238-239 Back

302  Ev pp 259-260 Back

303  Q 66; Ev p 3 Back

304  Seventh Report, Session 1999-2000, Gulf Veterans' Illnesses, HC 125, paras 98-100; see also Gulf Veterans' Illnesses: A New Beginning, MoD, July 1997, para 2 Back

305  HC Deb, 9 January 2001, c 877-890 Back

306  See Seventh Report, Session 1999-2000, op cit, paras 5-6, 24-25 Back

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