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ARMED FORCES COMPENSATION SCHEME REVIEW

Hear a summary of the changes on our latest podcast - please click here
For a copy of the full Review report – click here.
Question and Answer brief – click here.

Summary of key findings
The Ministry of Defence has now announced the results of the Review into the Armed Forces Compensation Scheme (AFCS).  All the recommendations made by the Review have been accepted and we are now preparing for the changes required to implement them. Changes to legislation are required before the changes can be implemented.  It may be around 12 months before this can be done but we will introduce them as quickly as possible.
Once legislation has been changed, the Agency will then be able to begin to implement the new rules and to review all previous cases/decisions made since the scheme was introduced in April 2005.  As part of this process, existing AFCS recipients will be contacted automatically with details of changes to their awards and do not need to re-apply.  It is, however, very important that people keep us informed of changes to their address/contact details so we can write to them with details of changes to their awards.
No-one will be worse off because of these changes and claims should continue to be made now.  When legislation has been passed, the rule changes will also be applied to previous decisions made and any additional amounts due will be paid.  There is no impact on the War Pension Scheme.

Changes affecting Service Personnel/Veterans

The following will exceptionally be applied retrospectively to existing AFCS recipients (except changes to the bereavement grant – see below).

• Lump sum payments increased for all tariff levels (up to 68% more)

• Increased awards for mental health conditions – the top awards increasing from tariff 8 to 6.

• A new ‘interim payment’ for the more severely disabled, paid before a final decision is reached.

• Changes to how multiple injuries are considered so that some payment is made for all conditions sustained in an incident (see ‘More Detail’ below).

• Guaranteed Income Payments (GIP) to take account of future promotions that would reasonably have been expected and will calculate earnings to age 65, instead of 55.

• Bereavement Grant increased from £20,000 to £25,000 (does not apply to existing cases as this is an inflationary increase).

Changes to the wider scheme

• An independent Expert Medical Group will be established to advise on medical aspects of the scheme.  It will first consider hearing loss, mental health and injuries to genitalia.

• Time limits for claiming increased from 5 to 7 years.  Time limits for reconsiderations increased from 3 to 12 months.  Appeals to be possible up to 12 months from a reconsideration decision.  Time limits for claiming late onset illness increased to 3 years from onset.  Further ability to review an award (for significant and unexpected problems) after the current 10 year limit.

• Burden of proof – onus in favour of Service person if the MOD looses records.

• A list of diseases ’likely to be due to Service’ to be created to provide better clarity and easier decision making.

• Improved communication and awareness of the AFCS scheme and the support provided for those claiming. 

More Detail
The following changes will be made to the scheme:
The Size of the Lump Sum
In 2008, the Government increased the top level of tax-free lump sum award to
£570,000, a level that the Review found was commensurate with the life- changing nature of the injuries involved. However, the Review found that the other tariffs should be increased, with the awards for the most seriously injured below the top two levels increasing by over 50%. This will give award levels of:

Example (lump sums)
Pte Smith is injured in training and fractures the patella on one knee, causing significant functional limitation which is expected to last for more than 26 weeks. The injury is assessed as level 13. Under current arrangements, Pte Smith will receive a lump sum of £5,775. Under the proposed changes, he would receive a lump sum of £6,000, an increase of £225.

Expert Medical Group
The Review proposes the creation of a new independent expert medical group to provide specialist advice on the Scheme, drawing on the example of the Industrial Injuries Advisory Council. As one of their first tasks, the new group will look at a number of specific types of injury to make sure that awards are adequate and fair (including hearing loss, mental health and injuries to genitalia). They will also draw up a list of recognised diseases to make it clearer to individuals which illnesses are likely to be due to service and therefore covered by the Scheme.

Mental Illnesses
The Review also looked at mental illness. It proposes increasing the highest award for mental illness. It also believes that mental illness should be covered in a separate section of the Scheme to physical illness, in recognition of the differences between the two. The new expert medical group will also ensure that the revised Scheme continues to provide the right level of
compensation in this very difficult and complex area.

Guaranteed Income Payment (GIP)
Even after personnel have recovered, serious injuries will often have long term
effect, including on their future careers and earnings. The tax-free and index linked Guaranteed Income Payment is intended to address this by supplementing whatever income and pension they are able to earn. In this way the AFCS does not have a capped total payment – those most seriously injured will continue to receive payment for the rest of their lives. It is paid from the moment that the Service man or woman leaves the Armed Forces. The payment takes into account their age, their salary, the severity of their injuries, the pension an individual might have earned, and the ill health pension they will also be paid.

Taking account of promotions (GIP)
The biggest change the Review proposes is that GIP payments should be increased to reflect the average number of promotions someone of a particular age would achieve if they had not been injured. The Review also proposes other changes to reflect that most people work until 65 rather than 55. In real terms, for a 21 year old Private suffering life changing injuries these changes will result in a 35% increase in the monthly payment they receive. These
changes will also benefit those who, as a result of a bereavement due to service, are in receipt of Survivor’s Guaranteed Income Payment or Child’s Payment under the Scheme.
Example (GIP)

A 21 year old Private infantry soldier joined the Army at age 18. Whilst on foot patrol he is injured in an IED attack and loses both his legs from the knee down. He suffers no other injuries. He is a member of Armed Forces Pension Scheme 2005 (AFPS05). His final salary is £17,605. Under the existing rules for calculating GIP, he will receive £15,616 a year tax free and index-linked from his GIP and ill-health pension. Under the new rules, he will receive £21,056 a year tax free and index-linked from his GIP and ill-health pension. This represents an increase of £5,440 a year, or the equivalent of a rise in income of 35%.

Bereavement Grant
The Review also proposes an increase in the future level of bereavement grant
provided when an individual dies due to service. For most people this will rise from £20,000 to £25,000; for some Reservists it will be even more. The Review also proposes that all these levels are reviewed periodically.

Multiple Injuries
The Review believes that it is right that the most seriously injured receive the highest awards – regardless of whether they have received one or many injuries. But the Review believes it is important to injured personnel that each of his or her injuries have been recognised in the compensation they are awarded.
The new system will mean that injuries will be analysed and grouped according
to the five different zones of the body: the head and neck; the torso; upper and lower limbs), impact on the senses; and, mental health. A percentage will then be applied (100, 80, 60, 40 and 20) to each zone by order of severity to form the total award. All injuries will therefore in future receive
some compensation.

Example (multiple Injuries)
A soldier sustained multiple injuries, allocated to the body areas the injuries are:

A. Head and Neck
skull fracture Level 13 £5,775
jaw fracture Level 14 £2,888
severe facial lacerations Level 8 £48,875

B. Upper and Lower Limbs
leg injury Level 9 £34,100
fractured shoulder Level 11 £13,750
injury to foot Level 10 £23,100

C. Torso
Gun shot wound Level 10 £23,100

D. Sensory Impairment
Permanent hearing loss in one ear Level 11 £13,750

E. Mental Health
mental disorder Level 14 £2,888

Total awards for body areas are:
A) Head and Neck £57,538
B) Upper and Lower Limbs £70,950
C) Torso £9,075
D) Sensory Impairment £13,750
E) Mental Health £2,888
Under current rules, where only the three most serious injuries are considered, the total would be: 100% of £48,875 + 30% of £ 34,100 + 15% of £23,100 = £62,570.
 Under the new rules the total would be:
100% of £70,950 + 80% of £57,538+ 60% of 13,750 + 40% of £9,075 + 20% of £2,888 = £129,438
This represents an increase of £66,868

New Interim Payment
In future, greater use should be made of interim payments where an injury is
clear, but its ongoing effect is not. For the more serious injuries, a new form of payment will also be created so that some compensation can be paid early on, even when a decision on the full extent of the injuries is not possible.

Timescales for claiming and lodging appeals
Timescales will also be increased to aid decisions being taken once the individual’s medical condition is clear. The time for individuals to make a claim will be increased from 5 to 7 years; the time to request reconsiderations and appeals will be increased to 12 months; and the time to make a claim for a late onset illness (including relevant mental illness) will increase to 3 years after the injury develops. In cases where additional significant and unexpected problems occur a further ability to review an award after 10 years will also be created.
The aim in future will be to provide decision-makers with the ability to revise the compensation awarded until the precise nature and effect of the injury is clear. This will ensure individuals receive the right compensation for their injury. The Review does not believe the Scheme should be entirely administered by trained medical officers, but it is important they are involved at the right stage. In particular, it proposes that they have more opportunity to comment prior to Tribunal hearings.

Example (reconsideration)
A pilot is involved in a crash and sustains injures that requires a below-knee amputation. He functions well with a prosthetic limb; however, fifteen years later, due to unforeseen and unexpected complications relating to the original injury and its treatment, the leg needs to be amputated above the knee. Because this deterioration is unforeseen and unexpected, the pilot can have his award re-assessed under the Scheme.

Burden of proof - lost/missing records
The Review has examined the burden of proof arrangements used in the scheme and recommends they are not changed. Most of the work in this area should still fall to the Ministry of Defence so as not to burden the individual. However, two specific elements require some change. Firstly, if key records are incomplete or have been lost by the Ministry of Defence then the individual will have the benefit of presumption

Disease due to Service
Secondly, for cases involving disease, the Scheme will in future follow a similar approach to that used by the Industrial Injuries Compensation Scheme. The new expert medical advisory group will create a list of recognised illnesses which, on the balance of probability, are likely to be due to service. This will add greater clarity for those with illnesses.

Communication and Awareness
The Review was greatly concerned at the low level of awareness and understanding of the Scheme among service personnel and their families. Substantial improvements are required to the way in which the Scheme is communicated. Information on the Scheme is already provided to new entrants, as part of training before deployment on operations, and at defence medical facilities. The level of support provided to individuals in making claims, understanding what the Scheme is for, and making informed decisions about how to manage the potentially substantial sums involved, must be improved.

Key Conclusions
It is crucial that the Armed Forces know that if they are injured due to Service they will be properly supported by the Nation, and this includes that they will receive the right compensation. The Review concludes that the Armed Forces Compensation Scheme already goes a long way to meeting this goal, but makes a number of recommendations about how it should be improved. The Government has accepted all those recommendations.
Questions and Answers – click here.