The Armed Forces have operated three different pension schemes over the past 50 years, and Service personnel today may have benefits across all three depending on when they joined and their career path. This guide compares AFPS 75, AFPS 05, and AFPS 15 side by side for 2026/27, including the McCloud remedy choice between legacy schemes for the affected period.
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When each scheme applied
| Scheme | Active for new joiners | Status today |
|---|---|---|
| AFPS 75 | 1975 to 2005 | Closed to new joiners; legacy benefits preserved |
| AFPS 05 | 2005 to 2015 | Closed to new joiners; legacy benefits preserved |
| AFPS 15 | 2015 onwards | Active for all new and current personnel |
Service personnel who joined before April 2005 had AFPS 75 by default, with an option to transfer to AFPS 05 (rare). Personnel who joined between 2005 and 2015 were enrolled in AFPS 05. Personnel joining since April 2015 are enrolled in AFPS 15. McCloud applies to legacy scheme members for the remedy period 1 April 2015 to 31 March 2022.
High-level comparison
| Feature | AFPS 75 | AFPS 05 | AFPS 15 |
|---|---|---|---|
| Type | Final Salary | Final Salary | CARE (Career Average) |
| Accrual rate (officer) | 1/77 to 1/47 (rank-based) | 1/70 | 1/47 |
| Accrual rate (OR) | 1/77 to 1/55 (rank-based) | 1/70 | 1/47 |
| Lump sum | 3 times pension | 3 times pension | None automatic; commutation option |
| Employee contribution | Nil | Nil | Nil |
| Normal Pension Age | 55 (if 22 years done) | 55 (if 18 years done) | 60 (linked to SPA above 60) |
| Immediate Pension Point | 22 years (officer) / 22 years (OR) | 18 years | Not applicable (uses EDP instead) |
| Death-in-service lump sum | 4 times pensionable pay | 4 times pensionable pay | 4 times pensionable pay |
| Spouse pension | 50% of member pension | 62.5% of member pension | 62.5% of member pension |
AFPS 75 - the legacy final salary scheme
AFPS 75 was the first formal Armed Forces pension scheme. It paid:
- A pension as a percentage of final salary.
- A tax-free lump sum of 3 times the annual pension.
- Immediate Pension at the 22-year point (regardless of age) for those Service personnel who completed 22 years of service.
AFPS 75 accrual was generous at senior ranks because the scheme used a rank-based accrual rate - Officers progressing to senior ranks built pension faster than the headline 1/77 implied. A Brigadier with 35 years AFPS 75 service could expect a pension of around 70% of final salary.
The Immediate Pension feature was unique to AFPS 75 - Service personnel could draw their full pension at age 40 or 45 if they had 22 years done, with no actuarial reduction. The early retirement was effectively the most valuable feature.
AFPS 05 - the closed final salary scheme
AFPS 05 was the successor scheme for personnel joining between 2005 and 2015. Key features:
- Final salary basis with 1/70 accrual.
- Tax-free lump sum of 3 times pension.
- Improved spouse pension to 62.5% (versus 50% in AFPS 75).
- Improved death-in-service lump sum of 4 times pensionable pay.
- Immediate Pension at 18 years rather than 22.
AFPS 05 was actuarially less valuable than AFPS 75 for senior officers (1/70 versus rank-based AFPS 75) but more valuable for ratings and junior officers because of the improved survivor benefits.
AFPS 15 - the current CARE scheme
AFPS 15 is the post-Hutton-Review reformed scheme:
- Type: Defined Benefit Career Average Revalued Earnings (CARE).
- Accrual rate: 1/47 of pensionable pay per year (highest accrual rate among public-sector schemes).
- Revaluation: CPI annually.
- Normal Pension Age: 60 (linked to State Pension Age above 60).
- Early Departure Payment (EDP): lump sum plus income stream available at 20-year service point.
AFPS 15 is the most generous CARE scheme in UK public service, reflecting the unique Service requirements compensated through the high accrual rate. Employee contribution remains zero.
The McCloud remedy and the choice between schemes
For Service personnel with legacy AFPS 75 or AFPS 05 service who continued into the AFPS 15 period, the McCloud remedy applies to the period 1 April 2015 to 31 March 2022:
- Default position: service in this period is treated as AFPS 75 or AFPS 05 (whichever applied).
- At retirement, members can choose AFPS 15 (CARE) for this period if it would produce higher benefits.
- The Remediable Service Statement (RSS) issued by Veterans UK shows both options.
For most affected personnel, AFPS 15 (CARE) produces a higher benefit because:
- The 1/47 accrual is generous compared to AFPS 75 (1/77 to 1/55) or AFPS 05 (1/70).
- The CARE revaluation kept pace with inflation during high-inflation years 2022 to 2025.
But personnel who had a substantial salary growth during the remedy period - especially those promoted to senior ranks - may find AFPS 75 or AFPS 05 final salary better. The RSS confirms the figures.
See McCloud Remedy Deep-Dive 2026 for full McCloud framework detail.
Tax-free lump sum comparison
Each scheme treats the tax-free lump sum differently:
| Scheme | Lump sum at retirement |
|---|---|
| AFPS 75 | 3 times annual pension automatically |
| AFPS 05 | 3 times annual pension automatically |
| AFPS 15 | None automatic; commutation option to convert pension into lump sum at 12:1 ratio |
For someone with £10,000 of annual pension entitlement:
- AFPS 75 / 05: £30,000 tax-free lump sum plus £10,000 a year pension.
- AFPS 15: £10,000 a year pension. Optional commutation: convert £1,000 of pension into £12,000 lump sum (so £4,000 commuted gives £48,000 lump sum and a £6,000 pension).
The AFPS 75 / 05 lump sum is automatically tax-free up to the Lump Sum Allowance (LSA) introduced in April 2024 (£268,275). AFPS 15 commutation is similarly tax-free within LSA.
Which scheme produces higher benefits
The answer depends on:
- Final salary versus average salary across the service period.
- Length of service.
- Rank progression.
- When the member retires.
A simplified rule of thumb:
- For personnel with strong rank progression in the last 2 to 5 years of service, AFPS 75 or AFPS 05 typically produce higher benefits (final salary captures the high years).
- For personnel with steady service and regular pay growth, AFPS 15 typically produces higher benefits (CARE accrual builds compounding pension across the career).
- For personnel with a major promotion or pay increase between 2018 and 2022, the legacy scheme is often better for the remedy period.
The RSS and a regulated FCA-authorised pension adviser can give the precise answer for individual circumstances.
Annual Allowance interaction
All three schemes test against the Annual Allowance (£60,000 in 2025/26). The Pension Input Amount is calculated as:
- Increase in accrued pension × 16, plus
- Lump sum increase, plus
- Less inflation-related uplift (CPI + 0%).
For a senior officer (Wing Commander or Captain RN) approaching retirement, the AA can be triggered by:
- Promotion in the final years (final salary scheme spike).
- High CPI revaluation in the AFPS 15 portion.
- Late-career commutation decisions.
Service personnel approaching AA breaches should consider:
- Scheme Pays - paying the AA charge from the eventual pension benefit.
- AVC contributions to a pension AVC scheme (less relevant for AFPS members because employer contribution is already at 28%).
- Carry forward of unused AA from prior 3 tax years.
Pension as percentage of final salary - illustrative
| Years service | AFPS 75 (officer) | AFPS 05 | AFPS 15 (CARE) |
|---|---|---|---|
| 22 | 50% | 31% | 47% |
| 30 | 65% | 43% | 64% |
| 35 | 70% | 50% | 74% |
AFPS 15 catches up after 30 years because of the steady CARE accrual without rank-driven slowdowns. The differences explain why personnel close to the IP point under AFPS 75 / AFPS 05 retired early - there was less marginal benefit from continued service.
Death-in-service benefits
| Scheme | Death-in-service lump sum | Spouse pension |
|---|---|---|
| AFPS 75 | 4 times pensionable pay | 50% of member's accrued pension |
| AFPS 05 | 4 times pensionable pay | 62.5% of member's accrued pension |
| AFPS 15 | 4 times pensionable pay | 62.5% of member's accrued pension |
The AFPS 05 / AFPS 15 spouse pension is significantly more valuable than AFPS 75 - a meaningful improvement for younger generations of Service personnel.
Action checklist for Service personnel
- Identify which scheme applied during your service career (AFPS 75 / 05 / 15).
- If you served before April 2015, confirm whether McCloud applies.
- Save your Remediable Service Statement (RSS) when issued.
- Use Veterans UK pension portal to check accrual figures.
- Engage Forces Pension Society (£35/year) for impartial advice.
- For substantial AA exposure or scheme choice decisions, consult an FCA-authorised pension adviser experienced with public-sector and Armed Forces schemes.
Disclaimer
PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated pension or financial advice. The Armed Forces pension schemes are technical and interact with HMRC tax rules, McCloud remedy provisions, and individual service history - for substantial decisions especially around retirement timing, McCloud choice, AA charges, or Lifetime Allowance legacy issues, consult a regulated FCA-authorised pension adviser experienced with Armed Forces personnel.
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