Ignoring This Could Cost You Thousands - EDP Explained

Ignoring This Could Cost You Thousands - EDP Explained

The Early Departure Payment or EDP is a benefit that is unique to the UK Armed Forces and only applies to those on the Armed Forces Pension Schemes 05 and 15.

The benefit sees those that are eligible receive a lump sum payment upon leaving the Forces and a monthly income which is paid up until the Armed Forces Pension becomes payable in their lates 60s.

The lump sum is tax free but the monthly income is taxable. The amounts that are awarded are calculated from the annual deferred pension of the relevant scheme. If a serving personnel has time on both the AFPS 05 and 15, then they are eligible for the EDP on both schemes.

The EDP is used a retention tool as it is aimed at keeping people serving in the Armed Forces until they are at least 40 years old. This is done serving personnel having to meet certain criteria before becoming eligible for the benefit.

On the AFPS 05, the criteria is as follow, they need to have served at least 18 years and be 40 or over BUT under 55 when leaving the Forces. This is known as the 18/40 EDP Point. And on the AFPS 15, the criteria are that they need to have served at least 20 years and be 40 or over BUT under 60 when leaving the Forces. This is known as the 20/40 EDP point.

Both of these factors need to be reached in order to be eligible.


Links:

Armed Forces Pension Calculator -    • Armed Forces Pension Calculator For Squaddies  
Armed Forces Pension Scheme –    • Armed Forces Pension Schemes For Squaddies  


Timecodes:

0:00 Intro
0:17 Basic EDP guidelines
0:47 What are the EDP eligibility criteria?
1:25 What does the EDP offer?
1:43 How is the EDP calculated?
2:51 Extra EDP information
3:33 How to claim the EDP?
3:40 When will I be paid the EDP?
3:47 EDP inverse commutation
4:23 EDP and re-joining the Armed Forces
5:26 EDP Example
9:58 Comparison between 12 years and 24 years service
10:31 Final thoughts
10:50 Outro


Sources:

AFPS 05 https://assets.publishing.service.gov...

AFPS 15
https://assets.publishing.service.gov...


DISCLAIMER:
I am not a professional financial advisor and this video is not financial advice. Please do your own research before making any decisions with your money and seek professional financial advice if need be.