Key areas of concern have been addressed in changes to the Armed Forces pension and compensation schemes which were announced yesterday.

Parliamentary Under-Secretary of State for Defence Ivor Caplin, in a written statement, said that the new schemes “are designed to be fairer, to reflect modern practice and to meet the needs of the Armed Forces in the 21st century, and to offer a high level of assurance for Service personnel.”

Among the “substantial new arrangements for dependants” are:

• A death-in-service benefit of four times pensionable pay, an increase from the current one-and-a-half times pensionable pay
• An increase of 25 per cent in widow’s or widower’s pension compared to the current scheme
• An extension of dependent’s benefits to unmarried partners where there is a “substantial relationship”.

Mr Caplin said: “These changes reflect key concerns raised during consultation and address the need to make proper provision for those who are left behind when personnel are killed in service.”

The new schemes are the result of a review which canvassed opinion in a consultation period in 2001, with particular account taken of the views of those serving in the Armed Forces, those representing the ex-Service community and the recommendations of the House of Commons Defence Committee in March 2002.

The new Armed Forces Pension Scheme (AFPS) will be introduced for new entrants on April 6 2005, and current members of the Armed Forces will have the opportunity top transfer to the new scheme “as soon as possible but no later than April 6 2007.”

The decision to transfer will be entirely voluntary for each individual, said Mr Caplin.

The new compensation scheme will also come into effect in April 2005 and will replace provisions under the War Pensions Scheme and attributable benefits under the current AFPS for incidents arising from that date.

“The new scheme reflects modern practice. It is fair, transparent, simple to understand and offers consistent outcomes, with more focus on the severely disabled,” said Mr Caplin.

“It is a no-fault scheme. It provides a lump sum payment for pain and suffering which is a new benefit not available under current arrangements.

“In addition, a Guaranteed Income Stream will be awarded alongside higher level tariff awards for those who suffer significant loss of earnings capacity.

“Unlike the current arrangements, there will be in-service lump sum awards for pain and suffering, including for injuries resulting from warlike activities.

“Benefits will be provided for dependants where deaths result from service but will be extended to include unmarried partners, where there is a substantial relationship.

“There will be a time limit to claim of five years, with exceptions for late-onset conditions. Claims will be assessed using the ‘balance of probabilities’ standard or proof, in line with civil law and common practice elsewhere.”

Both new schemes are regarded as broadly ‘cost-neutral’, that is there will be neither increased costs or savings, though there will be some increase in up-front costs with the payment of lump sums for pain and suffering under the new compensation scheme.

More details of information from the consultation process and a more detailed explanation of the schemes are available at www.mod.uk/issues/pensions