AFPS 15: a non-contributory gold standard
Regular and reserve service personnel build benefits in the Armed Forces Pension Scheme 2015 (AFPS 15). What sets it apart from most public-sector schemes is that it is non-contributory — you pay nothing from salary, and the Ministry of Defence funds the whole thing. Each year you accrue a pension worth 1/47th of your pensionable pay, revalued by CPI plus 1.5% in service. For a benefit that costs you nothing directly, this is outstanding value, and it cannot be transferred out.
Early Departure Payments and resettlement
The military's biggest distinction is the Early Departure Payment (EDP) scheme. If you leave the regulars from age 40 with at least 20 years' service, you receive a tax-free lump sum plus a monthly income stream until your AFPS 15 pension comes into payment at age 65/State Pension age. This recognises that many leave service decades before normal retirement. EDP income is taxable, and the full pension is preserved until later.
Saving on top with a SIPP
Because military careers can end early and EDP income is modest, many personnel build a private pot to supplement it. A SIPP is ideal — particularly for capturing resettlement, second-career or self-employed income.
| Provider | Fee (2026) | Best for |
|---|---|---|
| Vanguard SIPP | 0.15% (cap £375) | Lowest-cost long-term saving |
| AJ Bell SIPP | 0.25% | Wider fund/ETF choice |
| PensionBee | 0.50–0.95% | Simple app-based saving while posted abroad |
| Standard Life | ~0.50–0.75% | Bundled second-career workplace pensions |
Things military savers should watch
- AFPS 75/05 legacy benefits and the McCloud remedy may apply if you served before April 2015 — check your remedy statement.
- If posted overseas, you can still contribute up to £3,600 gross a year to a UK personal pension even with no UK relevant earnings, and more if you do have UK earnings.
- The annual allowance is £60,000 for 2026/27.
- The full new State Pension of £11,973 a year is payable on top of AFPS benefits.
Transitioning to civilian life
The pension priority shifts the moment you leave service. Many veterans move into civilian employment and are auto-enrolled into a workplace pension, building a defined contribution pot alongside their preserved AFPS benefits. Others go self-employed or start a business, where a SIPP — or employer contributions from a limited company — is the efficient route. The key is to keep saving: AFPS 15 plus EDP rarely provides a full retirement income on its own if you leave young, so a civilian pension layered on top is usually essential. Consolidating any small workplace pots from job moves into one low-cost SIPP keeps things manageable.
Death and ill-health protection
AFPS provides valuable survivor and ill-health benefits that personal pensions cannot match. Death-in-service lump sums and ongoing pensions for spouses, civil partners and eligible children are built in, and members medically discharged may receive enhanced ill-health benefits. The separate Armed Forces Compensation Scheme covers injury or illness caused by service. Understanding how these interact with your AFPS pension matters, particularly around discharge, so it is worth getting your benefits explained in detail before you leave. For complex situations, the Forces Pension Society and a regulated adviser are useful resources.
Verdict
AFPS 15 is exceptional — a fully funded, inflation-linked, non-contributory pension with a unique Early Departure Payment for early leavers. Stay in it. Because so many leave service young, the smart complement is a low-cost SIPP (Vanguard for cost, AJ Bell for choice) to top up EDP income and fund a comfortable transition to a second career and beyond. Get advice if McCloud remedy choices apply to you.
Related reading: best pension UK, DB vs DC pensions, and best SIPP providers.