UK Armed Forces Pension vs US Military Retirement: AFPS 15, High-3 and BRS Compared

The UK Armed Forces Pension Scheme 2015 (AFPS 15) is a career average pension that members join without paying contributions and can claim after two years. The US Blended Retirement System (BRS) pays a smaller lifetime pension only after 20 years, and adds a Thrift Savings Plan (TSP) account that members can take with them when they leave earlier. This guide sets the two designs side by side with the official figures.

The two designs at a glance

Sources: MOD Discover My Benefits, DFAS and the DoD Guide to the Blended Retirement System.

UK: Armed Forces Pension Scheme 2015

How the pension builds

Each scheme year (1 April to 31 March), 1/47th of your pensionable earnings goes into your pension pot, starting from your first day of paid service. The pot is revalued each year, and pensions rise annually with CPI once in payment. Pensionable earnings are basic pay plus any amount the scheme manager designates. Allowances and Recruitment and Retention Pay are excluded, according to JSP 905.

As an illustration, £40,000 of pensionable earnings in one scheme year adds about £851 of annual pension (£40,000 divided by 47) before revaluation. This example uses a round hypothetical figure.

Service personnel pay nothing towards the scheme. The MOD describes it as non-contributory, and the 2012 announcement of the new scheme put its cost at 31.5 percent of pensionable pay, all funded by the Exchequer.

When you can claim

• Normal Pension Age 60: serving to 60 entitles you to an immediate pension.
• Two years of qualifying service: leaving after two years but before 60 gives a deferred pension, claimable at State Pension age.
• From age 55: a deferred pension can be paid early with a permanent actuarial reduction.
• Lump sum: you can swap pension for a lump sum at 12 to 1, so each £1 of pension given up buys £12.

Early Departure Payment (the 20/40 point)

Regular Forces members who leave aged 40 or over, before 60, with at least 20 years of continuous or aggregated Regular service receive an Early Departure Payment (EDP 15). It pays a tax-free lump sum of 2.25 times the deferred pension plus a taxable monthly income of 34 percent of the deferred pension, with 0.85 percent of the deferred pension added for each year served after 20. Members can choose inverse commutation to give up the lump sum for higher monthly income. The monthly payments stay flat until 55, then rise with CPI growth since exit.

Other benefits

• Resettlement Grant: available after at least 12 years of service if you leave without an EDP 15 or immediate AFPS 15 pension. The fixed sum on the MOD page is £11,651 (an April 2018 figure, so check the current amount).
• Death in service: a spouse or partner pension of 62.5 percent of the pension plus a lump sum of four times final pensionable earnings.
• Ill-health: JSP 905 defines Tier 2 (significant impairment, enhanced by one third of the service remaining to Normal Pension Age) and Tier 3 (permanent serious ill-health, enhanced by half of the remaining service, with a guaranteed minimum of 25 years).
• Older schemes: AFPS 75 covers people who joined between 1975 and 2005. Benefits already earned under AFPS 75 and AFPS 05 are protected.

US: two systems that coexist

Legacy High-3

The retired-pay base is the average of your highest 36 months of basic pay. The multiplier is 2.5 percent per year of service, so 20 years pays 50 percent (DFAS). There is no pension for a member who leaves before 20 years.

As an illustration, a High-3 average of $60,000 after 20 years gives $30,000 a year under the legacy formula and $24,000 under BRS, because of the 2.0 percent multiplier. This example uses a round hypothetical figure.

Blended Retirement System

BRS applies automatically to anyone who joined on or after 1 January 2018. The opt-in window for earlier joiners closed on 31 December 2018, and more than 400,000 DoD service members opted in. Members with 12 or more years at 31 December 2017 stayed in the legacy system. Opt-in was irrevocable. BRS has four parts:

1. Monthly pension: 2.0 percent x years x High-36 average, so 40 percent at 20 years, with a full cost-of-living adjustment.
2. Automatic TSP contribution: the service pays 1 percent of basic pay after 60 days, at no cost to you. It vests after two years.
3. TSP match: up to 4 percent more. The match is dollar-for-dollar on the first 3 percent you contribute and 50 cents on the dollar on the next 2 percent. You must contribute 5 percent to earn the full match. For members who joined from 2018, matching starts at the 25th month of service.
4. Continuation pay: a one-time mid-career bonus paid after 8 and before 12 years of service in return for further obligated service. It is 2.5 to 13 times monthly basic pay for active duty and 0.5 to 6 times for Guard and Reserve.

At retirement, members can take 25 or 50 percent of the discounted present value of their retired pay as a lump sum, which reduces monthly pay until full Social Security retirement age (67 for most). They must elect at least 90 days before retiring. The DoD guide also reports default enrolment of new members at 3 percent of basic pay. Military OneSource states that about 85 percent of active-duty and reserve members will receive a retirement benefit under BRS.

TSP limits for 2026

The elective deferral limit for 2026 is $24,500 for members under 50, covering Traditional and Roth contributions combined and excluding matching money. Members aged 50 and over can add $8,000, and those aged 60 to 63 can add $11,250, according to a federal payroll bulletin.

What the comparison shows

• The UK scheme gives something to everyone with two years of service. The US pension gives nothing before 20 years, and BRS fills the gap with the TSP.
• The UK scheme costs members nothing. US members build the match only by contributing their own pay.
• At 20 years the legacy US formula pays the highest percentage of final pay. BRS cuts the multiplier from 2.5 to 2.0 percent in exchange for the TSP and a lump-sum option.
• UK early leavers aged 40 with 20 years get a tax-free lump sum and income through the EDP. The US monthly pension starts after 20 years of service, whatever the member's age.

Who to ask

Anyone moving between countries should also read the guides to the income cliff after service and covenant and VA benefits.