CONFIDENTIAL
ANNEX
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,
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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 Lime 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 from age 21 in the case of officers, and at least 16 years' qualifying service from a ge 18 in the case of Servicemen. Special Capital Payment will be smaller for those who have less than 5 years still to go or have already served for more than 10 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.
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CONFIDENTIAL
CONFIDENTIAL
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