REQUEST FOR RESOURCES 1—ARMED FORCES RETIRED PAY, PENSIONS, ETC

1.   Summary of Changes sought in the Spring Supplementary Estimate

  The main reasons for the Armed Forces Retired Pay and Pensions Spring Supplementary Estimate is to request an additional resource of £500 million, and to request an increased net cash requirement of £150 million.

2.   Detailed Explanation of the Change and Allocation

  The increase in the resource requirement is mainly because of a higher interest charge on the Armed Forces Pensions Scheme (AFPS) pension liability resulting from a larger than expected increase in the liability, as calculated at year end by the Government Actuarial Department (GAD); and a large increase in the calculated Armed Forces Compensation Scheme (AFCS) provision. The AFCS is a new scheme, which is proving extremely difficult to forecast in the early years because of the lack of historical data on which to base a provision.

  The increase in the net cash requirement of £150 million arises from additional lump sum payments and Early Departure Payments than envisaged. Additionally, the latest Superannuation Contribution Adjusted for Past Experience (SCAPE) income forecast is lower than budgeted.

3.   Changes to Cash Requirement Allocation

  There is an increase in the net cash requirement of £150 million as a result of these changes.