CONFIDENTIAL
CONFIDEMA
ANNEX H
REDUNDANCY COMPENSATION FOR THE ARMED FORCES
1. The compensation to be paid to UK personnel who are made
redundant is described below. As in past redundancy programmes,
it will take account of the curtailment of their expected Service
careers (to which they are committed by binding engagements),
their loss of prospects, the higher rates of pension which they
might have earned had they served longer and the difficulties they
may face in starting new careers in civilian life.
2. For officers serving on permanent commissions who are pre-
maturely retired, and for servicemen serving on pensionable
engagements or who would have had a clear prospect of re-engaging
for pension had the need for redundancy not occurred, compensation
will take the form of a tax-free lump-sum payment, or Special
Capital Payment, graduated according to length of service given
and the length of time for which, but for redundancy, the in-
dividual could have expected still to serve before normal retirement.
The maximum rate of Special Capital Payment will be equivalent to
18 months' military salary; this will be paid to those who at the
time of redundancy would still have had more than 5 years to go
before normal retirement, and who have already given at least 13 years' qualifying service in the case of officers, and at least 16 years' qualifying service
i n the case of servicemen. The
Special Capital Payment will be smaller for those who have less
than 5 years still to go or have already served for more than
12 years but less than 13 (or 16). It will be based on the rate
of pay received by the individual at the time of leaving the
Service, whether in an acting, temporary or substantive rank.
CONFIDENTIAL
CONFIDENTIAL