Annex G
ARMED FORCESJOINT COMPENSATION REVIEW
Further example cases
The attached examples set out a comparison of the benefits available on death or injury in the armed forces under:
(a) Existing benefitspaid through a combination of the attributable benefits of the Armed Forces Pension Scheme and the War Pension Scheme.
(b) Proposed benefitsas set out under the Joint Compensation Review Consultation document dated March 2001.
War Pension Scheme benefits are shown at 2001-02 rates.
The examples chosen are intended to illustrate the main features of the Review proposals. They do not cover every feature of the proposals and do not show all potential interactions with benefits potentially available as DWP allowances or means-tested benefits.
The examples provided are:
1. Death in service |
Other Rank, two children |
2. Injury leading to discharge from services |
Tariff 2eg severe spinal cord injury |
3. Injury leading to discharge from services |
Tariff 4eg complete blindness |
4. Injury leading to discharge from services |
Tariff 10eg total deafness in one ear |
5. Injury leading to discharge from services |
Tariff 12eg severe damage to tendons in one leg
continuing disability |
6. Injury not leading to discharge |
Tariff 14eg loss of teeth |
Note that where benefits are payable from the Armed Forces Pension Scheme the benefits quoted under the proposed arrangements include allowance for the changes.
EXAMPLE 1
Attributable Death in Service
MemberSergeant, 12 years service, age 32 at death, pay level 6, salary £25,298.15
SpouseYesaged under 40
ChildrenYestwo (assumed to be aged under 16)
|
Existing Arrangements |
Proposed Arrangements |
Pension Scheme Benefit |
|
|
P1) Lump sum benefit |
£24,458 |
£75,894 |
P2) Pension to spouse pa |
£2,752 |
£4,246 |
P3) Pension to children (total) pa |
£2,752 |
£4,246 |
Attributable benefits/Compensation scheme |
|
|
A1) Lump sum award |
£12,229 |
Nil |
A2) Bereavement allowance |
Nil |
£20,000 |
A3) Pension to spouse pa |
£7,175[1] |
£9,057 |
A4) Pension to children pa |
£1,070[2] |
£5,515 |
War Pension |
|
|
W1) Spouse's pension pa (Lower rate) |
£4,735 |
Nil |
W2) Children pensions (total) pa |
£1,578 |
Nil |
Lifetime value |
|
|
Capitalised value of the above benefits (to nearest
£1,000) |
£171,000 |
£277,000 |
EXAMPLE 2
Attributable Injury Leading to Discharge and Subsequent Death in Retirement
MemberLieutenant, six years service, age 28 at injury, level 9, salary £24,378.35
InjurySevere spinal cord injury:100 per cent disablement under existing arrangements
Tariff level 2 in proposed scheme
Death occurs at age 48 and is attributable to the injury
SpouseAged under 40
ChildrenYestwo
|
Existing Arrangements
|
Proposed Arrangements
If Tier 3 ill health
benefits paid |
Pension Scheme Benefit |
|
|
P1) Lump sum benefit |
£17,127 |
£20,895 |
P2) Pension to member pa |
£5,709 |
£6,965 |
P3) Pension to spouse pa |
£2,855 |
£3,483 |
Attributable benefits/Compensation scheme |
|
|
A1) Lump sum award |
£17,642 |
£20,000 |
Triple A payment |
|
£175,000 |
A2) Pension to member pa |
£11,327[3] |
£13,625 |
A3) Pension to spouse pa |
£11,781 |
£6,813 |
War Pension |
|
|
W1) Pension to member pa |
£6,251 |
Nil |
W2) Contingent spouse's pension pa |
£4,812 |
Nil |
Lifetime value |
|
|
Capitalised value of the above benefits (to nearest £1,000) |
£491,000 |
£595,000 |
EXAMPLE 3
Attributable injury leading to discharge
MemberColonel, 20 years service, age 43 at injury, salary £54,560.20, level 6
InjuryComplete blindness100 per cent disablement under existing scheme
Tariff 4 in proposed scheme
SpouseYesAged over 45
ChildrenNo
|
Existing Arrangements
|
Proposed Arrangements
If Tier 3 ill health
benefits paid |
Pension Scheme Benefit |
|
|
P1) Lump sum benefit |
£67,101 |
£60,796 |
P2) Pension to member pa |
£22,367 |
£20,265 |
P3) Pension to spouse pa |
£11,183 |
£10,133 |
Attributable benefits/Compensation scheme |
|
|
A1) Lump sum award |
£13,778 |
|
A2) Triple A payment |
|
£75,000 |
A3) Pension to member pa |
£13,757[4] |
£39,725 |
A4) Pension to spouse pa |
£16,338[5] |
£19,863 |
War Pension |
|
|
W1) Pension to member pa |
£6,251 |
Nil |
Lifetime value |
|
|
Capitalised value of the above benefits (to nearest
£1,000) |
£870,000 |
£1,214,000 |
EXAMPLE 4
Attributable injury leading to discharge
MemberSergeant, 20 years service, aged 38 at injury, salary £25,298.15, level 6
InjuryTotal deafness in one ear ( no tinnitus/discharge)
20 per cent disablement under existing arrangement
Tariff 10 in proposed scheme
SpouseYesaged below 40
ChildrenNo
|
Existing Arrangements
|
Proposed Arrangements
If Tier 2 ill health
benefits paid |
Pension Scheme Benefit |
|
|
P1) Lump sum benefit
|
£23,847 |
£27,830 |
P2) Pension to member pa |
£7,949 |
£9,277 |
P3) Pension to spouse pa |
£3,975 |
£4,639 |
Attributable benefits/Compensation scheme
|
|
|
A1) Lump sum award
|
£2,446 |
|
A2) Triple A payment |
|
£15,000 |
A3) Pension to member pa |
£[6] |
£5,928 |
A4) Pension to spouse pa |
£5,952[7] |
£2,964 |
War Pension |
|
|
W1) Pension to member pa |
£1,250 |
Nil |
Lifetime value |
|
|
Capitalised value of the above benefits (to nearest £1,000)
£217,000
|
|
£311,064 |
EXAMPLE 5
Attributable injury leading to discharge
MemberCorporal, 12 years service, aged 30 at discharge, salary £24,298.05, level 5
InjuryDislocated shoulder with full recovery
Nil per cent disablement under existing arrangements
Tariff 12 in proposed scheme
SpouseNo
ChildrenNo
|
Existing Arrangements
|
Proposed Arrangements
If Tier 1 ill health
benefits paid |
Pension Scheme Benefit |
|
|
P1) Lump sum benefit
|
£14,883 |
£36,447[8] |
P2) Pension to member pa |
£4,961 |
£4,165[9] |
Attributable benefits/Compensation scheme
|
|
|
A1) Lump sum award
|
Nil |
Nil |
A2) Triple A payment |
Nil |
£7,500 |
A3) Pension to member pa |
Nil |
Nil |
War Pension
|
|
|
W1) Pension to member pa
|
|
Nil |
Lifetime value
|
|
|
Capitalised value of the above benefits (to nearest
£1,000)
|
£104,000 |
£71,000 |
EXAMPLE 6
Attributable injury remaining in service
MemberCorporal, six years service, aged 25 at injury, salary £24,298.05, level 5
InjuryLoss of teeth1-5 per cent disablement under existing arrangements
Tariff 14 in the proposed scheme
|
Existing Arrangements |
Proposed Arrangements |
War Pension Gratuity (if qualifies) |
£1,905 |
|
Tariff 14 lump sum |
|
£2,500 |
Capitalised value of the above benefits |
£1,905 |
£2,500 |
1 It should be noted that since this draft paper was written, the position on some issues will have moved on. It is provided as background to inform the Committee of the earlier work done to assist in developing the Department's proposals. Back
2 From 1 April 2002, J Sainsbury plc now offers stakeholder pensions to new entrants, not a final scheme Back
3 In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable widow's and children's pensions would be replaced by the attributable widow's and children's pensions. Back
4 In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable members and widow's pensions. Back
5 In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable members, widow's and children's pensions would be replaced by the attributable members, widow's and children's pensions. Back
6 In this example the non-attributable pension is higher than the attributable pension-no additional payment is made. This occurs when the individual has long service and a low degree of disability. Back
7 In this table the attributable benefits are shown as the addition to the pension scheme benefits-in practice the non-attributable widow's pension would be replaced by the attributable widow's pension. Back
8 Tier 1 gratuity assumed to be 1.5 months per year of service, with a minimum of six months salary and a maximum of two years salary-this approach has not been finalised. Back
9 Preserved pension payable from age 60. Back
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