Ministry of Defence
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National security strategy - retention
Increased retention bonuses worth up to £15,000 will be announced today, to reward those who stay in the armed forces, alongside a new £20 million pound pilot scheme to offer more affordable home ownership for service personnel and their families.
The Commitment Bonus, which encourages people to extend their service in the Armed Forces, will almost treble for service personnel staying in service for eight years. The bonus can also help more junior personnel achieve their home ownership aspirations.
Secretary of State for Defence, Des Browne said:
"I am determined that the government shows its commitment to our Armed Forces, and to help reinforce this I am announcing a big increase in the maximum commitment bonus of up to £15,000.
"In recognition of the aspiration that many Service personnel have to buy a home we are also announcing the creation of a new pilot scheme to boost home ownership within the Armed Forces."
All those personnel below Officer level passing the four year service point will have access to the new Commitment Bonus scheme from next year, although the exact start point will be determined by single service manning requirements. The longer they serve the higher the payment will be. The new scheme is designed to reward past service and to encourage further retention in the critical four to eight year period, where we face the greatest retention challenge.
Important steps have already been taken to assist Service personnel with home ownership. Existing schemes, such as the Key Worker Living Programme, have made an important start in promoting affordable housing for Service personnel. The new measures take MoD financial assistance to those wanting to buy houses still further.
In the coming months we will work with commercial providers and public bodies to identify the most suitable approach, which is likely to be based on shared equity or rent to buy arrangements
END
Notes to editors
Both changes will be implemented in 2009/10.
Commitment Bonus
* All those below Officer level, passing the four year service point from next year onwards will have access to a new Commitment Bonus scheme with graduated payments of up to £15K if they serve up to another five years.
* The availability of a lump sum payment nearly three times as large as that currently available should also help these more junior personnel and their families achieve their aspirations, such as getting on the housing ladder.
* Each Commitment Bonus point is accessible to those who have delivered the required service and have not given notice to leave. Personnel who receive a Commitment Bonus will be required to serve for a minimum further period of 12 months from the qualifying date of the payment.
* The individual can take the Commitment Bonus paid in up to two bites - for example at the 4 year point and the 8 year point. If early bites are taken, the overall amount received will be reduced; thus providing the incentive to wait and take the larger sum later.
Years Gross Second bite claimed at: Service amount
5 years 6 years 8 years
4 3750 1250 2500 7500
5 5500 1250 6250
6 7500 5000 8 15000
* Commitment Bonuses are a taxable lump sum and are subject to National Insurance contributions.
Home Ownership
* MOD recognises and understands the aspiration of many Service personnel to buy their own home, in common with the wider population. Surveys confirm that this is a factor which influences retention.
* Existing schemes to help Service personnel include the Long Service Advance of Pay, and access to the Government's Key Worker Living Programme - recently extended so that Service personnel can qualify for all elements of the scheme, and will be treated as a priority group across England and Wales.
* For this new scheme, MOD will be working with public bodies and commercial providers, to establish how best to tailor it to the particular needs of Service personnel, such as the need for mobility during a Service career.
