§ Mr. Ramsden
asked the Minister of State for Defence what progress has been made in the review of Service pensions; and if he will make a statement.
§ Lord Balniel
We have now completed the first part of our review of Service pension arrangements, leading to the introduction of a new pension code for men and women serving on or after 31st March, 1972. This will establish a more coherent link between pay and pensions at a level which takes account of good modern practice and of the special circumstances of the Services, with their relatively short careers.
Pensions will continue to be related to rank and length of service and will also be related to common representative pay rates for each rank. At the full career point, normally at age 55, pensions will be broadly half the average pay rate over the last year of service. At the minimum retiring ages which qualify for pension, the rates will lie between one-quarter and one-third of the pay rates. Terminal grants will continue to be payable at three times the annual rate of pension. No change in length of service to qualify for pension is involved.
The main effect of these new arrangements is to bring about significant improvements in pensions for other ranks, especially at the minimum length of service—22 years—which qualifies for pension, where the increase will be not less than 50 per cent. on present rates and in many cases rather more. The size of the improvements will become progressively smaller towards the full career point—after 37 years'service—where the existing rates are already fairly close to half pay. The major improvement will therefore be made where it is most needed to assist other ranks who are required to leave the Services at about the age of 40. The changes in pensions for officers will be relatively small.
The publication of the new pensions code will be delayed so that it may also take account of changes in Service pay which may result from recommendations by the Armed Forces Pay Review Body.