§ Lord James Douglas-Hamilton
asked the Secretary of State for Defence how many Armed Service pensioners receive pensions which are not compensated for the effects of inflation on their purchasing 377W power; and what is the total sum to be paid in 1975 for such pensions; (2) how many of the Service men to be made redundant under the defence cuts already announced will receive pensions which are not compensated for inflation; (3) how much extra money would be needed in 1975 to compensate Armed Service pensioners who are not compensated for the effects of inflation, under the rules applicable to those Armed Service pensioners who do receive compensating increases.
§ Mr. Judd
The purchasing power of Service pensioners is maintained by increases paid under the provisions of the Pensions (Increase) Act 1971. When a Service pensioner reaches age 55 the original value of his pension is restored and is thereafter maintained by annual review; this will apply equally to United Kingdom personnel made redundant as a result of the defence review. Pensions increases are, however, payable immediately to those who are invalided or become incapacitated after retirement.
At present about 70,000 United Kingdom Armed Forces pensioners do not qualify for pensions increases because of their age. The total cost of their pensions in the current financial year is of the order of £38 million. The cost of paying them pensions increases would be of the order of a further £20 million to £25 million in the current financial year.