Veterans Affairs Committee on March 26th, 2009

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Thank you very much, Mr. Chairman.

Mr. Davies, thank you very much for appearing before us today.

Sir, on the amount that is given in the compensation scheme, I notice that in December 2008 you literally doubled the amount of the compensation lump sum that an individual can receive. Is that taxable?

[Peter Davies]

No, that's tax-free.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Now, in Canada, if a person joins the military, they have to do 25 years of service. So they could be 20 years old when they start, and at age 45 they could retire and get a certain percentage of their pension for the rest of their life.

What is it in Britain now? How many years does a person have to serve before they are eligible for a pension?

[Peter Davies]

In detail, it's slightly different. In the old scheme, the armed forces pension scheme we call AFPS 75, officers could receive an immediate pension after serving 16 years beyond the age of 21. So the earliest you could get a pension would be around age 37. You could start accruing benefits only after age 21, even if you joined at 18. For other ranks, it's 22 years of service from age 18. So you could retire at around age 40. That's AFPS 75.

The new scheme introduced in 2005 has one criterion for officers and other ranks, and we call this the 18/40 point. So it's after 18 years of service and at least age 40. You start accruing benefits when you join.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

And when that individual dies, what is the percentage of the pension that goes to the remaining spouse?

[Peter Davies]

In the old scheme, it was up to a maximum of 50% of the pension. Under the new scheme, it's up to two-thirds.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

When did the two-thirds scheme kick in?

[Peter Davies]

It was in 2005. So those still serving in 2005 were given a choice: stay under the old scheme or switch to the new one. One of the significant changes in the new scheme was enhanced dependants' benefits—a higher death-in-service lump sum, higher-percentage pensions, and retention of benefits on remarriage. Those who had already left got the benefits they had.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

In Canada, if a young soldier is killed in the line of duty, the soldier's spouse receives about a $250,000 lump sum payment or something slightly higher, but if there is no remaining spouse or child, there is no benefit. Mothers or fathers don't get anything. Is it the same in England, or do you have a different system?

[Peter Davies]

If a single person were to die in service, then there would only be a lump sum, either to the estate or to someone who had been nominated. Neither scheme pays out if there is no dependant, apart from the lump sum. The amount of that lump sum is a calculation based on the amount of salary they were paid and how much service they'd already accrued. For example, in AFPS 05, the death-in-service lump sum is four times salary.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

So if a person wasn't married or had no children, would the estate receive whatever benefits there were?

[Peter Davies]

Yes, but there would be no ongoing income stream. Where there is a spouse or dependent children, if they were nominated, they would get the lump sum and the income stream as well.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Say a 21-year-old person joined the military in Britain, served about two years, went to Afghanistan and was killed. Roughly how much would be paid to the estate?

[Peter Davies]

Let's say that this was a private soldier who finished basic training and was earning about £18,000 a year. The lump sum would be four times that, which is £72,000. I'm not sure what that is in Canadian dollars. This would be the lump sum that would go to the estate. If the death was due to service and there was a spouse or dependent children, then there would be an income stream to them that would come out of the armed forces compensation scheme. If the death was not due to service—our scheme works on whether it's due to service or not—if the person had invested in the pension scheme, which I think requires two years of service, he would just get the lump sum but no pension.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Thank you very much.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Stoffer.

Now, Mr. Kerr.

[Greg Kerr, Conservative, West Nova, NS]

Thank you very much, Mr. Chair.

I see that other members are coming and going here, as other committees are starting at eleven. So I'll just start with one basic question—if we have a quorum.

Thank you, Mr. Davies, for that. It's a lot of interesting stuff. I'm just going to ask one basic question. I was very interested when you talked about the integration of services. Recently you ended up with a department and a minister of veterans affairs. Can you expand on how that works? It's always very intriguing when you hear how governments can actually work together internally. How do you provide that, and what is the relationship internally that makes that work?

[Peter Davies]

We do not have a separate department for veterans affairs.

[Greg Kerr, Conservative, West Nova, NS]

Didn't you say there was a minister?

[Peter Davies]

We have a minister within the Ministry of Defence, so his portfolio includes—

[The Chair, Conservative, David Sweet]

I'm sorry, but I have to stop the questions, because the bells are ringing. It's a standing order that once the bells ring, we need to adjourn the meeting, unless there's unanimous consent not to do so—and I don't think—

[Greg Kerr, Conservative, West Nova, NS]

I thought I was on a roll here too.

[The Chair, Conservative, David Sweet]

I apologize, Mr. Davies, but this is one of the realities of Parliament: we need to rush back to the House.

I want to thank you for your service today, and please pass on our thanks to your general department, as well, for your participation in this. We may be contacting you again.

[Peter Davies]

Well, if you have questions by e-mail, we can see what we can do with some of the specific points we can pick up.

[The Chair, Conservative, David Sweet]

Thank you so much.