Select Committee on Defence Third Report


1. The Armed Forces Pension Scheme was set up in its present form in the early 1960s and the last major improvements were made between 1968 and 1973. It provides retirement, ill health and dependants' benefits for members of the three Services. Since the time of the First World War, a separate system of disablement benefits has operated to provide financially for those who are injured, become ill or who are widowed as a result of military service.

2. Our inquiry into the Ministry of Defence's (MoD) reviews of Armed Forces pension and compensation arrangements arose from the publication of two consultation documents in March 2001. These documents made proposals for new schemes, following separate reviews of the current pension and compensation arrangements conducted over three years.[1] The Defence Committee has taken a long interest in pension and compensation arrangements for Armed Forces personnel. Previous Committees have commented on the adequacy of current provision, most frequently in the context of a number of inquiries into Gulf veterans' illnesses. In their Report in April 2000, our predecessors said: 'What is important ... is that those who have served their country feel that they are adequately compensated if they have suffered illness as a result of their service.'[2] The Committee believed then that it was inappropriate to make detailed recommendations about pension and compensation arrangements when the Ministry of Defence's reviews were already under way.

3. Towards the end of the last Parliament, the Committee conducted an in-depth inquiry into Armed Forces personnel issues. It expressed frustration that the conclusions of the MoD's reviews were still not known, and expressed the hope that: ' the outcome of the current reviews of pensions and of compensation ... will ensure that the MoD is seen as moving closer to being the type of caring and effective employer we expect it to be.'[3] In undertaking this current inquiry we too have sought to ascertain whether the new schemes which the MoD is proposing meet the high standards which we expect, and which Armed Forces personnel deserve.

4. We decided, at our first meeting in the new Parliament in July 2001, to look at the review findings. Our intention then was to take oral evidence and report in the autumn. The MoD's consultation process has been more prolonged than they anticipated when the consultation documents were published and this delay has inevitably affected the timetable for our own inquiry. We comment in more detail below about the timescale for the reviews.

5. In March, we took evidence from two of the key organisations which represent ex-Service personnel: the Royal British Legion and the Forces Pension Society. This was followed by evidence from the Minister of State for the Armed Forces (Rt Hon Adam Ingram).[4] Written evidence was received from a number of organisations, and is published with this Report.[5] We are grateful to all those who have submitted their views.

6. We would like to thank the specialist advisers who assisted us in this inquiry: Professor Malcolm Harrington, Emeritus Professor of Occupational Health, University of Birmingham; Mr Andrew McDonald, senior solicitor, Thompsons Solicitors; Professor Mark Mildred, Professor of Advanced Litigation, Nottingham Law School; Mr John Robbs, former Head of Service Personnel Pensions Policy, Ministry of Defence; and Sue Ward, freelance pensions expert.

Scope of the inquiry

7. The MoD has explicitly stated in the Review documents that the proposals for the new schemes are not intended to be retrospective.[6] The Minister for Veterans' Affairs told our predecessors that this was government policy for any new scheme.[7] What the MoD describes as 'legacy' issues—loopholes, errors and perceived failings of the previous systems—are not therefore addressed. Such issues include the recent disclosure that tax had been deducted in error from certain Service invaliding pensions,[8] and the withdrawal of War Widows' pensions on remarriage. There are other matters of concern relating to compensation for industrial injuries, particularly asbestos-related illnesses, which affect MoD civilian employees as well as Armed Forces personnel. In this inquiry we have focused specifically on the proposals in the Review documents. These are complex matters which it is crucial for the MoD to get right to ensure that future provision for Armed Forces personnel is of a high standard and that anomalies are less likely to occur. However, areas in the existing pension and compensation arrangements which have caused problems for current and former Service personnel are clearly also important issues, and we intend to turn our attention to them later this year.


1   The Armed Forces Pension Scheme Review: A Consultation Document and Joint Compensation Review: A Consultation Document, Ministry of Defence, March 2001 Back

2   Seventh Report from the Defence Committee, Session 1999-2000, Gulf Veterans' Illnesses, HC 125, paragraph 74 Back

3   Second Report from the Defence Committee, Session 2000-01, Strategic Defence Review: Policy for People, HC 29-I, paragraph 170 Back

4   See Ev 1-78 Back

5   See List of Written Evidence, p 64; Ev 79-141 Back

6   Pension Review document, Executive Summary, page 3; Compensation Review document, paragraph 6.10 Back

7   Minutes of Evidence, 9 May 2001, Gulf Veterans' Illnesses, HC 517-i (Session 2000-01), Q 42 Back

8   See HC Deb, 25 April 2002, c 426w Back

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