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   Pensions and Compensation - Armed Forces Compensation Scheme


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What is a Guaranteed Income Payment ?

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In addition to a lump sum award, a graduated Guaranteed Income Payment (GIP), payable for life, will also be paid to those whose injuries would cause a significant loss of earning capacity.  This monthly income stream is intended to supplement any income and pension you are able to earn.  The payment takes into account your age, salary, the severity of your injuries, the pension you might have earned, the potential loss of promotions you might have gained and the ill-health pension you will also be paid.

If you have an injury or illness that has been awarded between tariff levels 1 to 11 you will be entitled to a GIP.  This is paid from the day after service ends (where a claim is made whilst still in service) or from the date of claim (if you claim after discharge).  GIP is up-rated annually in line with the Consumer Price Index (CPI).  Awards of GIP are subject to adjustment where appropriate. Awards made in tariff levels 12 to 15 do not attract a GIP. 

The GIP is calculated by multiplying your basic salary (excluding allowances) by the appropriate age factor. Click here for an example GIP base figure calculation.

The final amount of GIP payable is a percentage of the GIP base figure dependent of the tariff level of the injury for which an award is made.  The percentages are in four bands as follows:

Band A -           tariff levels 1 to 4                      100% of GIP base figure
Band B -           tariff levels 5 to 6                      75% of GIP base figure
Band C -           tariff levels 7 to 8                      50% of GIP base figure
Band D -           tariff levels 9 to 11                    30% of GIP base figure

The GIP band is determined by the most serious injury or injuries. 

If the two most serious injuries are within the same band, then the amount of GIP payable will be calculated using the band above the band the injuries are within.  Band A is the maximum amount payable.  If the two most serious injuries are within different bands, the amount of GIP payable will be calculated using the band appropriate to the most serious injury.

Example calculations

Click here for an example calculation involving one qualifying injury

Click here for an example calculation involving more than one qualifying injury

Adjustment

Awards of GIP may be subject to adjustment due to payments made under the Armed Forces Pensions Schemes (AFPS75 and AFPS05) and, in the case of members of the Territorial Army (TA) and Reservists, under civilian occupational pension schemes.

Where a Service person is receiving either an invaliding pension or ill-health pension from AFPS75 or AFPS05 for the same injury for which an award under AFCS has been made, any GIP payable is adjusted by the full value of that pension.  This is because the invaliding pension or ill-health pension becomes tax-free once an award under AFCS has been made.

Click here for an example calculation where an invaliding or ill health pension is paid for the same injury as the AFCS award.

Where a Service person is receiving either an invaliding pension, or ill-health pension from AFPS75 or AFPS05 for a different injury for which an award under AFCS has been made, any GIP payable is adjusted by 75% of the value of that pension.  This is because the invaliding pension or ill-health pension remains taxable.

Where a Service person has a normal occupational pension in payment (AFPS75 or AFPS05) or is receiving an Early Departure Payment, the GIP is adjusted by 75% of the value of the occupational pension or Early Departure Payment.  This is because the occupational pension and Early Departure Payments are taxable.

Click here for an example calculation where an invaliding or ill health pension is paid for a different injury to the AFCS award or an occupational pension is in payment.

Preserved pension benefits
Where a Service person has entitlement to preserved pension benefits under AFPS75 or AFPS05, the GIP is not adjusted until that pension comes into payment.  When the preserved pension comes into payment at either age 60 or 65, the GIP is adjusted by 75% of the value of the preserved pension.  This is because the preserved pension is taxable
.

Reservists
Where a Reservist (including TA) is in receipt of a civilian occupational pension for the same injury or illness for which an award has been made under AFCS, the GIP is adjusted by 75% of the value of the civilian occupational pension.  This is because the civilian occupational pension is taxable.

   

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