Police and Armed Forces Pensions: Options for Veterans Living Abroad

The pension arrangements for police officers and armed forces personnel are among the most distinctive in the UK public sector. Both groups often retire relatively young by comparison with civilian schemes — some police officers receive full pension benefits in their late 40s or early 50s, and armed forces personnel may access immediate pensions after 20 or more years of service. For veterans and former officers who subsequently move abroad, managing these pension benefits as a non-resident raises specific questions about payment, taxation, and interaction with other savings.

This guide is written for UK veterans and retired police officers living outside the UK who want to understand how their existing pensions work, what options they have, and what to expect from a tax perspective in their country of residence.

This guide is for information only and does not constitute personalised financial advice. Schemes have changed multiple times and rules are complex; seek specialist advice.

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Armed Forces Pension Scheme (AFPS)

The Armed Forces Pension Scheme has three main variants depending on when personnel joined and their service dates:

AFPS 75

For those who served prior to April 2005. A generous final salary arrangement providing an immediate pension after 16 years of officer service (22 years for other ranks). The pension is calculated at 1/48th of final pensionable pay per year of service and is paid without any reduction from the day of leaving (for those meeting the qualifying service threshold). A terminal grant (lump sum) of 3× annual pension was also payable.

Many AFPS 75 pensioners who retired in their 40s are now living abroad and have been drawing their armed forces pension for decades.

AFPS 05

For those who joined from April 2005. The pension is payable as an immediate pension (IP) after 18 or more years of service (or at the preserved pension age of 65 for shorter-serving personnel). IP members also receive an Early Departure Payment (EDP) lump sum at certain service thresholds. Terminal grants apply for those who serve beyond the IP threshold.

AFPS 15

The current scheme, introduced from April 2015 as part of the wider public sector pension reforms. A career average scheme with accrual at 1/47th of pensionable pay per year. Immediate pensions are payable after 20 or more years of service; shorter service generates deferred benefits payable at state pension age.

McCloud remedy: As with civilian public sector schemes, AFPS 15 members with service between April 2015 and March 2022 who were moved from legacy arrangements have remedy rights. Veterans in this category should contact Veterans UK for updated pension illustrations.

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Police Pension Scheme (PPS)

Police Pension Scheme 1987

The most generous historic police pension arrangement, providing:

• Full pension after 30 years of service, calculated at 2/3 of final pensionable pay.
• Early pension available after 25 years, calculated at a lower rate.
• A commuted lump sum option at retirement.
• Normal retirement at 55, but many officers retired in their 40s after long service.

Officers with PPS 87 benefits who retired decades ago will typically be receiving a pension already. Those who left before qualifying for an immediate pension will have deferred benefits.

New Police Pension Scheme 2006 (NPPS)

Introduced in April 2006 for new joiners:

• Pension after 35 years at 1/70th of final salary per year.
• Enhanced maximum pension at 40 years.
• Less generous than PPS 87.

Police Pension Scheme 2015

A career average scheme introduced for all officers from April 2015 (with McCloud remedy rights for those transitioned from legacy schemes). Normal pension age is 60. Benefits accrue at 1/55.3th of pensionable pay per year, revalued by CPI annually.

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Receiving Armed Forces or Police Pension Abroad

Both schemes will pay pension income to overseas bank accounts, though the process and documentary requirements should be confirmed with the relevant administrator:

• Armed forces pensions: Administered by Veterans UK (part of the Ministry of Defence). Contact them to update bank details to an overseas account and to advise of a change of address.
• Police pensions: Administered by the individual police force's pension administrator (or in some cases, a third-party administrator). Contact your former force's HR or pensions department.

You do not need to be in the UK to receive your pension, but you must keep your contact and bank details up to date.

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Early Departure Payments (Armed Forces)

Personnel who leave before qualifying for an immediate pension but who meet the relevant Early Departure Payment (EDP) thresholds receive an EDP. Under AFPS 05, the EDP point is at least 18 years' service and age 40 (the "18/40 point"). Under AFPS 15, the EDP point is at least 20 years' service and age 40 (the "20/40 point"). In each case the EDP comprises:

• An EDP lump sum paid on departure.
• A monthly EDP income paid until the member's deferred pension comes into payment.

For AFPS 05, the EDP income runs to age 55, at which point the preserved pension comes into payment. For AFPS 15, the EDP income runs to the scheme's normal pension age of 60 (with the deferred pension otherwise payable at State Pension age). Veterans living abroad who receive EDP income must notify Veterans UK of their overseas address and bank details. EDP payments are taxable as income and the same UK source tax and DTA considerations apply as to the main pension.

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Taxation for Veterans Living Abroad

Armed forces and police pensions are government service pensions. The "government service article" in most UK double taxation agreements applies. Under most UK DTAs:

• Government service pensions (including armed forces and police pensions) can be taxed only in the UK, regardless of where the recipient is resident, unless the recipient is a national and resident of the other country.
• In some treaty countries, if you are a national of that country (not a UK national), the pension may be taxed in your country of residence instead.

This means many veterans living abroad will continue to pay UK income tax on their armed forces or police pension, with the tax deducted at source through PAYE. If you believe a DTA exemption applies (particularly the nationality clause), you must claim it proactively from HMRC via the DT Individual process.

Countries where UK veterans commonly live — such as Spain, Cyprus, France, Australia, Canada, and the UAE — each have different DTA terms. Take specific advice on your country of residence.

UAE and Gulf states

Many veterans relocate to the UAE or other Gulf states. The UK has limited or no comprehensive DTA with some Gulf states (as of 2026, the UK–UAE DTA does not cover certain categories of income in the same way). UK source tax may therefore remain payable, and local exemptions in countries with no income tax (such as the UAE) simply mean the UK tax is paid without any offsetting local liability. Verify the current DTA position with a specialist.

Australia

The UK–Australia DTA has specific provisions; armed forces pensions paid to UK nationals resident in Australia are typically taxed only in the UK. Australian residents who are Australian nationals may have different treatment. This is an area requiring specific advice for each individual's nationality and residency status.

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Pension Increases

Armed forces and police pensions in payment are increased annually in line with CPI (from 2011; before that, RPI). This means the pension's sterling value grows annually, broadly preserving purchasing power in UK terms.

For veterans spending their pension in a foreign currency, the real purchasing power depends on both UK inflation and exchange rate movements. Over long periods, sterling's trajectory against major currencies (AUD, EUR, USD, AED) can significantly affect the lifestyle income the pension provides.

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Interaction with State Pension and Other Savings

Many veterans and police officers have service gaps or incomplete NI records if they left the UK before reaching state pension age and did not make voluntary contributions. Before reaching state pension age, obtain a state pension forecast from HMRC and consider whether gaps in your NI record are worth filling (see our guides on voluntary NI contributions from abroad).

Veterans who had short civilian careers before or after service may also have deferred workplace pensions, personal pensions, or SIPPs. If so, the combined income from all sources needs to be planned holistically.

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Transferring Armed Forces or Police Pensions

It is not possible to transfer an armed forces pension to a SIPP or QROPS once the pension is in payment. For personnel who left before qualifying for an immediate pension and have a deferred preserved pension, a transfer out is technically possible but:

• FCA-regulated pension transfer advice is legally required for transfers above £30,000.
• Public sector pension transfers, especially from schemes as generous as PPS 87 or AFPS 75, are almost never in the member's financial interest.
• The starting presumption in regulated advice is that transferring out of a defined benefit scheme is unlikely to be suitable.

If you have a very short period of deferred service (typically resulting in a very small pension) and wish to transfer for simplification purposes, seek regulated advice to confirm this is appropriate.

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Pension Splitting on Divorce

Armed forces and police pensions can be subject to pension sharing orders on divorce, including international divorces. If you divorced before or after leaving the UK and a pension sharing order was made against your pension (or in your favour), the relevant pension administrator will implement the order. For ongoing pension credit payments to a former spouse, arrangements can also be made for overseas payment.

See our separate guide on pension sharing on divorce for cross-border expat couples.

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Practical Steps for Veterans and Former Officers Living Abroad

1. Keep Veterans UK or your police pension administrator updated with your current overseas address and bank details. Use a reliable international bank account (USD, EUR, or sterling accounts are most practical) to receive pension payments.

2. Review your DTA position. Before your pension commences (or if you have recently moved abroad), check the government service pension article of the relevant DTA and whether your nationality affects treatment.

3. File a UK self-assessment return if you have UK-source income subject to PAYE. Non-residents with UK pension income should confirm with HMRC whether self-assessment is required.

4. Review your state pension record. Military service earns NI qualifying years (credited contributions). Confirm your NI record includes your service period correctly.

5. Consider what happens to the pension on your death. Armed forces and police schemes have survivor pension and children's pension provisions. Review the scheme's death benefit rules and nominate dependants where required.

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How Global Investments Can Help

Global Investments has extensive experience working with UK veterans and retired police officers who are navigating their pension arrangements from abroad. We can help you understand the DTA implications of your specific country of residence, plan how your service pension integrates with state pension and other savings, and ensure your estate planning reflects the particular rules of armed forces and police pension death benefits.

We work across multiple jurisdictions — including Spain, Cyprus, the UAE, Thailand, and Australia — where UK veterans commonly settle. Contact us for a pension planning review that takes your service history seriously.

Pension rules and legislation may change. Tax treatment depends on individual circumstances and the terms of applicable double taxation agreements. This guide is for information only and does not constitute personalised financial advice.