The Pension Trap You Shouldn’t Escape From

Digital Smartarse
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To put some meat on the bone and to add the opinion of a serving soldier please bear with me while I bleat on for a few minutes.

The facts are out there and the injustice is obvious and can’t in my opinion be excused, but I have a different angle.

I have not got long left to serve in the Army and am what some may say pension trapped, I’m so far into my full service that if I decided to leave it would dramatically reduce my pension. On the other hand If I decided to leave early I would not get a pension but would potentially be more employable.

I’m happy to stay and risk my age impacting on my ability to start a new career but I’ll have the buffer of my pension to soften the blow. These few good men are in the same position but have just had the safety net ripped away.

Related Links

Pension Justice for Troops – e-petition

1 Comment

In my opinion, the pension trap disproportionately affects those who don’t have a directly relevant vocational skill that they can carry on. So although if you’re a pioneer or an anti-tank gunner you’ll probably have to start a career from scratch but, on the other hand, someone with a fair bit of IT skills and experience shouldn’t fear leaving before their 22 year point, as they can easily earn way more than their military salary and far outweigh the eventual pension benefits.

Let’s say average soldier (from my IS trade background) on £40k at his 15 year point leaves the service and earns a very realistic £400 a day as an IT contractor, so he can make probably about £95k a year. He coasts along doing that for another 22 years and retires at 55 and he’ll have made over £2 million. Easy peasy.

Meanwhile you see his mucker who stays in a further 7 yrs on £40k, plus his £55k lump sum and then for the next 15 years he gets a pension of approx £8-9k. Even if he then gets £400 a day contracting alongside his mate, he will NEVER catch up.

Obviously there are lots of other factors, including tax efficiency measures, personal pensions, individual talents, promotion in civvie-strasse, but early departure is nothing to fear. Preparation is the key.


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