Forces Pension Society challenges threat to tax-free pension lump sum

There have been persistent rumours of reductions in the tax-free pension lump sum allowance. Back in October 2024, Forces Pension Society CEO, Maj Gen Neil Marshall wrote to the Chief Secretary to the Treasury on behalf of FPS Members and the wider Armed Forces community. A reassuring response was received from government. But the rumours have persisted ahead of this year’s Budget Statement, prompting Maj Gen Marshall to write once again to the Chief Secretary to the Treasury. These are some extracts from that letter.

“I feel compelled to write again since the subject is of such vital importance, and the potential consequences of an ill-informed decision too severe, to wait until the outcome of the Autumn Budget Statement.

“Such a decision would run counter to the letter and spirit of the Armed Forces Covenant and could trigger a significant spike in resignations, leading to a loss of many in key leadership positions.

“At a time when national defence needs are of such vital importance and recruitment and retention are so critical to our security, the risk is not in the national interest.”

Maj Gen Neil Marshall commented:

“So many personnel, serving and retired, have made commitments and planned their futures based on the existing pension promised by the Government. The rumoured change to LSAs (Lump Sum Allowances) would undoubtedly be seen as a major breach of trust.”

The Forces Pension Society is an independent, not-for-profit membership organisation that provides pension guidance to those serving and retired, across all three services, and represents the pension interests of the whole military community. Last year, the Society’s expert Forces Pensions Consultants dealt with almost 30,000 pension enquiries. Membership of the Society is growing and numbers more than 66,000. To read the text of the latest letter in full, visit forcespensionsociety.org