Pensions PART 1 Preliminary Citation and commencement 1 This Order— a may be cited as the Armed Forces Redundancy Scheme Order 2020, and b comes into force on 1st January 2021. PART 2 Establishment of the Armed Forces Redundancy Scheme 2020 Establishment of Armed Forces Redundancy Scheme 2020 2 1 The Scheme set out in the Schedule is to be known as the Armed Forces Redundancy Scheme 2020. 2 The Schedule has effect. PART 3 Amendment of the Armed Forces Redundancy Scheme 2006 Amendment of the Armed Forces Redundancy Scheme Order 2006 3 The Armed Forces Redundancy Scheme Order 2006 (“the AFRS 2006 Order”) is amended in accordance with articles 4 to 8. Amendment of article 3 of the AFRS 2006 Order 4 In article 3 (interpretation), insert at the appropriate place in alphabetical order— “AFPS 2015” means the pension scheme established by the Armed Forces Pension Regulations 2014 ; “flexible service” means one or both of the following types of service— part-time service; restricted separation service, and references to a member serving on flexible terms must be construed accordingly; “part-time service” means— for enlisted members, a period of service where the member is serving in accordance with an arrangement provided for in regulations made under section 329(2)(ha)) of the Armed Forces Act 2006 ; for members who are officers, a period of service on equivalent terms of service; “restricted separation service” means— for enlisted members, a period of service where the member is serving in accordance with an arrangement which does not restrict the member’s service in a particular area but does make it subject to other geographic restrictions provided for in regulations made under section 329(2)(i) of the Armed Forces Act 2006 ; for members who are officers, a period of service on equivalent terms of service; “service reduction percentage” has the meaning given by article 3A; . Insertion of new article 3A in the AFRS 2006 Order 5 After article 3 (interpretation) insert— Meaning of “service reduction percentage” 3A 1 In the Scheme, the “service reduction percentage” in respect of a period of flexible service is given by the formula, expressed as a percentage— ( A − B ) A where— A is the basic pay which the member would have received in respect of that period of flexible service had the person not been serving on flexible terms; B is the basic pay received by the person in respect of that period of flexible service. 2 For the purposes of the Scheme, a period of flexible service ends and another begins when any change in the service reduction percentage occurs. . Amendment of article 4 of the AFRS 2006 Order 6 In article 4 (eligibility for redundancy payments)— a in paragraph (3), for sub-paragraph (a) substitute— a has been notified by or on behalf of the Defence Council that their service is to be terminated and that they will be eligible for compensation under the Scheme; ; b for paragraph (5), substitute— 5 Condition D is that the person is not entitled to an ill-health pension. ; c after paragraph (5) insert— 5A For the purposes of this article references to an ill-health pension include a pension under: a rule D.5 in Schedule 1 to the Armed Forces Pension Scheme Order 2005 , b rule D.6 in Schedule 1 to the Armed Forces Pension Scheme Order 2005, and c article 16 of the EDP Order . ; d at the end of sub-paragraph 6(b), insert “or the AFPS 2015, or who has opted to cease to be an active member of either of these pension scheme.”. Amendment of article 6 of the AFRS 2006 Order 7 In article 6 (amount of payment under article 5: leavers with long service commitments), after paragraph (6), insert— 6A Where a person has served on flexible terms, the person’s relevant service for each period of such service, calculated for the purposes of paragraph (2), is reduced by the service reduction percentage applicable to that period of flexible service. . Amendment of article 7 of the AFRS 2006 Order 8 In article 7 (amount of payment under article 5: leavers with short service commitments), after paragraph (3), insert— 3A Where a person has served on flexible terms, the person’s relevant service for each period of such service, calculated for the purposes of paragraph (3)(a), is reduced by the service reduction percentage applicable to that period of flexible service. . PART 4 Amendment of the Armed Forces Redundancy Scheme 2010 Amendment of the Armed Forces (Redundancy, Resettlement and Gratuity Earnings Schemes (No. 2) Order 2010 9 The Armed Forces (Redundancy, Resettlement and Gratuity Earnings Schemes) (No. 2) Order 2010 (“the AFRS 2010 Order”) is amended in accordance with articles 10 to 14. Amendment of article 2 of the AFRS 2010 Order 10 In article 2 (interpretation), in the appropriate place in alphabetical order, insert— “flexible service” means one or both of the following types of service— part-time service; restricted separation service, and references to a member serving on flexible terms must be construed accordingly; “part-time service” means— for enlisted members, a period of service where the member is serving in accordance with an arrangement under section 329(2)(ha) of the Armed Forces Act 2006 ; for members who are officers, a period of service on equivalent terms of service; “restricted separation service” means— for enlisted members, a period of service where the member is serving in accordance with an arrangement which does not restrict the member’s service in a particular area but does make it subject to other geographic restrictions provided for in regulations made under section 329(2)(i) of the Armed Forces Act 2006; for members who are officers, a period of service on equivalent terms of service; “service reduction percentage” has the meaning given by article 2A; . Insertion of new article 2A in the AFRS 2010 Order 11 After article 2 (interpretation) insert— Meaning of “service reduction percentage” 2A 1 In the Scheme, the “service reduction percentage” in respect of a period of flexible service is given by the formula, expressed as a percentage— ( A − B ) A where— A is the basic pay which the member would have received in respect of that period of flexible service had the person not been serving on flexible terms; B is the basic pay received by the person in respect of that period of flexible service. 2 For the purposes of the Scheme, a period of flexible service ends and another begins when any change in the service reduction percentage occurs. . Amendment of article 3 of the AFRS 2010 Order 12 1 Article 3 is re-numbered as paragraph (1) of article 3. 2 After newly re-numbered paragraph (1), insert— 2 In the case of a person who has served on flexible terms during any period for which basic pay is to be calculated under paragraph (1), that person’s basic pay is to be calculated as though they had not served on flexible terms for that period. . Amendment of article 6 of the AFRS 2010 Order 13 In article 6 (redundancy reckonable service), after paragraph (4), insert— 4A Where a person has served on flexible terms, the person’s relevant service for each period of such service, calculated for the purposes of paragraph (1), is reduced by the service reduction percentage applicable to that period of flexible service. . Amendment of article 9 of the AFRS 2010 Order 14 In article 9 (eligibility for redundancy payments)— a in paragraph (4), for sub-paragraph (a) substitute— a has been notified by or on behalf of the Defence Council that their service is to be terminated and that they will be eligible for compensation under the AFRS 2010; ; b for paragraph (5A), substitute— 5A Condition E is that the person is not entitled to an ill-health pension under the AFPS 1975. ; c for paragraph 6(b) substitute- b a person who is an active member of the Armed Forces Pension Scheme 2005 or the AFPS 2015, or who has opted to cease to be an active member of either of these pension schemes. . Johnny Mercer Parliamentary Under Secretary of State Ministry of Defence 12th November 2020