UK - Ministers are using improved benefits for unmarried and same-sex couples to disguise a major downgrade in armed forces' pensions, critics claim.
Opposition MPs and the financial services industry claim the changes – which have been dubbed the biggest shake-up of armed forces’ pensions since the 1890s – are another example of government “spin”.
The new scheme, which will boost benefits to unmarried and same-sex partners, will be introduced in April 2005.
But financial services group Smith & Williamson’s head of pensions and financial services, Mike Fosberry, said: “While they do change some anomalies in the existing pension arrangements, this is combined with a significant downgrading in the headline benefits.
“Overall the cost to the public purse of maintaining the scheme reduces. So widows’ benefits, for example, may be expressed as a higher percentage but will be based on a smaller sum.”
The Ministry of Defence was also criticised for trying to scale back servicemen’s lump sum payments.
But an MoD spokeswoman said the changes were not a cost-cutting exercise but a “rebalancing” and follow talks with the armed forces.
While she acknowledged lump sum payments were being reduced, she said the benefits were being transferred to other areas.
Conservative defence spokesman Bernard Jenkin said: “The men in the armed forces have accepted lower than average pay because they knew they would be treated very reasonably when they retire.
“This is a slap in the face for the armed forces, at a time when they are doing so much for global peace and security.”
And Liberal Democrat defence spokesman Paul Keetch said the shake-up would not allay the concerns of servicemen and women, but “some progress is better than none”.
He said: “The extra money for those left behind is good news but the new arrangements mean that many members of the forces will still receive pensions that are under the recommended Inland Revenue limits.”
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