Armed Forces Pension Scheme

Wednesday 8th February 2012 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

Changes to the armed force compensation scheme introduced in May 2011, and armed forces redundancies as a result of the strategic defence and security review, have increased the resource annually managed expenditure (AME) and net cash requirements for the armed forces retired pay, pensions etc. estimate in a manner which could not have been foreseen at the time of the main estimate in April. Parliamentary approval for additional resource AME of £1,340,000,000 has been sought in the supplementary estimate for armed forces retired pay, pensions etc. laid before the House today.

However, the rate of spend under this vote has also been faster than anticipated at the start of the year, for example, because payment of the retrospective additional compensation payments as part of the implementation of Lord Boyce’s recommendations for reform of the AFCS, has proceeded more quickly than expected. The Department therefore needs to make arrangements to ensure the financial obligations of the armed forces pension scheme can continue to be met up until the supplementary estimate is approved. Parliamentary approval for additional resources of £1,340,000,000 is sought in the supplementary estimate for the armed forces retired pay, pensions etc. Pending that approval, urgent expenditure estimated at £340,000,000 will be met by repayable cash advances from the Contingencies Fund.