Most serving personnel know they have an Armed Forces pension. Fewer know what it’s actually worth or how it builds over a career. The Armed Forces Pension Scheme 2015 (AFPS 15) is the current scheme for all serving Regular and Reserve personnel, and it works differently from the older AFPS 75 and AFPS 05 schemes it replaced.

Understanding your armed forces pension value now, rather than at the point of discharge, puts you in a far stronger position to plan.

How AFPS 15 builds your pension

AFPS 15 is a Career Average Revalued Earnings (CARE) scheme. Each year, 1/47th of your pensionable earnings is added to your pension pot. That slice is then revalued annually in line with Average Weekly Earnings, so it keeps pace with wage growth rather than sitting static.

In practical terms, if you earn £35,000 in a given year, roughly £745 is added to your future annual pension for that year of service. Over a 22-year career, those annual slices stack up. The revaluation means earlier slices grow in value over time, which is one of the strengths of the scheme.

AFPS 15 is non-contributory as standard, meaning nothing comes out of your pay. But in certain circumstances you can choose to make additional voluntary contributions to boost your pension benefits.

When you can draw it

The Normal Pension Age under AFPS 15 is 60. If you leave before 60, your pension is deferred and payable at State Pension Age unless you qualify for an Early Departure Payment (EDP). EDPs kick in after 20 years of service and a minimum age of 40. If you hit both thresholds, you receive a lump sum and a monthly income bridging the gap until your full pension starts.

This is worth understanding early. A significant number of personnel leave between the 12 and 18-year mark, which means they’ve built a meaningful pension but fall short of the EDP threshold. That gap between leaving and drawing the pension can be decades long.

What your pension is actually worth

The MOD provides annual benefit statements, and these are worth reading carefully. Your statement shows your accrued pension to date, projected pension at Normal Pension Age, and any EDP entitlement you’re building toward.

As a rough illustration: a Senior NCO serving a full career to 40 on a salary averaging £40,000 across their service might expect an annual pension in the region of £18,000 to £22,000 at age 60, depending on pay progression and revaluation. That is a valuable benefit, but it is not a full salary replacement, and it doesn’t arrive until 60 unless EDP applies.

Death-in-service and dependants

AFPS 15 includes a death-in-service lump sum of four times pensionable pay, plus a spouse’s or partner’s pension. These are significant benefits and form part of the overall value of the scheme. It’s worth checking that your nomination of beneficiaries is current, particularly after any change in personal circumstances.

Where the pension fits in your overall picture

Your armed forces pension is likely to be the most valuable financial asset you build during your career. But it is one part of a wider picture. It doesn’t cover the gap between leaving and drawing age. It doesn’t replace your full salary. And it doesn’t protect you against being unable to work due to illness or injury before you reach pension age.

Knowing what your pension is worth today, what it could be worth if you serve to your intended exit point, and what the gaps around it look like is the starting point. We help serving personnel do exactly that, at no cost. [Speak to one of our advisers.]