The Money Side of Leaving the Forces: A Resettlement Checklist

Why the Money Part of Resettlement Gets Left Too Late

Most service leavers plan their second career carefully. Fewer plan what happens to their money with the same discipline. The pension questions get pushed aside. The insurance gap goes unnoticed. The grants expire unused. By the time the last day arrives, some of those decisions cannot be reversed.

This checklist covers every significant financial item you need to address before, and shortly after, you leave. It is written for regular service personnel leaving under AFPS 15, though much of it applies regardless of which scheme you are on. Work through it section by section. The order matters.

Step One: Understand Exactly What Your Pension Does When You Leave

AFPS 15 is the current Armed Forces Pension Scheme. Since 1 April 2022, it is the only scheme any serving member builds pension in, regardless of when they first joined. It is non-contributory: you pay nothing towards it, and the Ministry of Defence funds the whole cost.

It is a career average scheme. Each year you build 1/47th of your pensionable earnings, revalued while you serve by Average Weekly Earnings, and by CPI once you leave. Normal Pension Age is 60. Serve to 60 and the pension is paid immediately. Leave earlier and it is deferred to your State Pension Age.

That deferred pension is not lost. But the timing matters enormously for your financial plan in the years immediately after discharge. Do not assume you will receive a pension income from day one unless you qualify for the Early Departure Payment.

The Early Departure Payment

The Early Departure Payment pays out from the 20/40 point, that is, age 40 with 20 years of regular service. It provides a tax-free lump sum of 2.25 times your deferred pension, plus a monthly income until State Pension Age.

If you do not meet that threshold, you leave with a deferred pension only, and you will need to fund the gap entirely from civilian income and any lump sum you receive.

The Lump Sum Rules Under AFPS 15

AFPS 15 will not automatically pay you a pension lump sum. However, you can create a tax-free lump sum by surrendering a part of your annual pension, a process known as commutation. You can take up to 25% of your overall pension benefits as a lump sum. The commutation rate is fixed at 12 to 1: for every £1 of pension that you permanently give up, you will receive a lump sum of £12.

If you wish to withdraw a lump sum, you must decide within the six months before your pension is due to be paid. Once made, your decision cannot be reversed.

This is one of the most consequential financial decisions a service leaver makes. Take time to model both scenarios before you commit.

The Resettlement Grant

You may qualify for a Resettlement Grant if you have served for at least twelve years on discharge and if you are not entitled to an EDP, an immediate pension under AFPS 15, or any other Resettlement Grant.

The Resettlement Grant is increased each year at the same rate as armed forces pensionable pay.

Check the current figure on GOV.UK using the Armed Forces Pension Calculator at the point of your discharge, as the value changes annually.

Step Two: Use Your Training and Education Grants Before They Expire

There are three main funding routes available during resettlement. Many service leavers use only one, or miss the deadlines entirely.

Enhanced Learning Credits (ELC)

The MOD’s Enhanced Learning Credits scheme promotes lifelong learning amongst members of the Armed Forces. It provides financial support in each of a maximum of three separate financial years, enabling higher level learning of a nationally recognised qualification at Level 3 or above with an approved Learning Provider.

Enhanced Learning Credits come in the form of a single up-front payment in each of up to three separate financial years. You will receive £1,000 for a lower-tier claim or £2,000 for a higher-tier claim.

ELC funding can be used for up to 80% of a course. You have to cover the remaining 20% yourself.

To qualify, you must have completed at least four years of service in the UK Armed Forces. You must also have registered for the ELC scheme while still serving, as registration cannot be done post-discharge.

Register now if you have not already done so.

Individual Resettlement Training Costs Grant

The Individual Resettlement Training Costs Grant is a financial provision available to service leavers to support their transition to civilian employment. Capped at £534, it is designed to cover the costs associated with training courses and other educational activities that enhance employability. Eligible service leavers can use the IRTC Grant to pay for course fees, accreditation, and other related expenses.

The IRTC Grant can be used in conjunction with other funding options, such as Enhanced Learning Credits, to maximise the financial support available for resettlement training.

Eligibility requires a minimum of six years of service, with exceptions for medical discharge or redundancy.

Standard Learning Credits

Standard Learning Credits support smaller-scale learning and can be valuable for lower-cost development or shorter courses where ELC is not the right fit.

Use SLC for courses that improve immediate civilian employability during the transition period, and reserve ELC for higher-value qualifications that will shape your long-term career direction.

Step Three: Engage the Career Transition Partnership Early

Personnel leaving the military receive support through the Career Transition Partnership, which launched in its current form on 1 October 2024. The new CTP, delivered by Reed in Partnership, helps approximately 15,000 service leavers each year through personal resettlement support, access to subsidised vocational training courses, training grants, resettlement allowances, a new digital platform, workshops and events, housing and finance briefs, and links with thousands of forces-friendly employers.

Service leavers can access CTP support up to two years before and two years after they leave the UK Armed Forces.

Use that window. The CTP finance briefs in particular are worth attending early, because they will help you map out what you have, what you will lose on discharge, and where the gaps sit.

Of the 2024/25 UK regular service leavers who used a billable CTP service and reported their employment outcomes six months after leaving service, 86% were employed.

That figure is strong, but it also means that planning your income during the transition gap is not optional.

Step Four: Sort Your Housing Before You Hand Back the Keys

The Defence Transition Services team is the MOD’s focal point for providing service personnel and their dependants with civilian housing information.

Book a civilian housing brief through DTS as early as possible. Housing decisions affect everything else on this checklist, including where you can realistically accept employment and what your monthly outgoings will look like in the first twelve months after discharge.

If you are in Service Family Accommodation, your entitlement ends with your service.

If you receive a pension or resettlement pay, get written confirmation to use as proof of income. If you need help with a deposit, some councils run deposit guarantee schemes for veterans, and charities including SSAFA and the Royal British Legion can sometimes assist with upfront costs.

If you are considering buying rather than renting, speak to a mortgage adviser who understands military income.

The Modernised Accommodation Offer also provides further support for service personnel becoming first time buyers, refunding up to £1,500 of their legal expenses.

Confirm your eligibility for this before you discharge.

Step Five: Deal With the Protection Gap That Opens on Your Last Day

This is the part of the resettlement checklist most service leavers ignore, and it is the part with the most serious consequences.

While you are serving,

if you die in service, your spouse, civil partner or eligible partner will receive an immediate pension, paid for life, and a tax-free lump sum amounting to four times your final pensionable earnings.

That death-in-service lump sum under AFPS 15 is four times final pensionable earnings, paid tax-free. That is the most generous multiple of any major UK public service pension.

On your last day, that benefit stops. No automatic civilian equivalent replaces it. If you have a mortgage, a partner, or children depending on your income, you are exposed from the moment you sign off.

Serving military personnel are not eligible for income protection insurance. That restriction does not change overnight on discharge, and civilian insurers will underwrite your application based on your new civilian occupation. The time to arrange life cover and serious illness cover is before you leave, not after. Applications made during service, when you are fit and active, typically attract stronger terms than applications made later in life or after a health event.

Vitality’s Serious Illness Cover pays out earlier and more often than traditional critical illness cover.

It is a severity-graded product that pays a proportion of the sum assured based on how severely each condition presents, rather than a binary all-or-nothing payout.

Absolute Military arranges VitalityLife Serious Illness Cover, available at 1X, 2X, and 3X levels, alongside VitalityLife Life Cover.

Speak to our Vitality Coach to understand which level of cover is appropriate for your circumstances and whether the Vitality Programme rewards can offset part of your monthly premium cost through healthy activity.

Step Six: Check Your State Pension Position

Years in service count towards your National Insurance record, but the picture is not always straightforward, particularly if you have had gaps in NI contributions or served overseas. Log in to your Government Gateway account and check your State Pension forecast before you leave. If you have gaps, voluntary NI contributions made early are considerably cheaper than the shortfall to your eventual State Pension.

Step Seven: Build a Transition Budget That Reflects Reality

The resettlement period frequently costs more than people expect. Training courses, travel, a rental deposit, professional memberships, new equipment, and the gap between your last military pay date and your first civilian salary can all combine to create a cash flow problem in months two to six after discharge.

Build a twelve-month budget before you leave. Include your expected EDP income or deferred pension start date, any resettlement grant, civilian salary start date and expected level, housing costs once SFA entitlement ends, and protection insurance premiums. That budget will tell you whether your emergency fund is adequate or whether you need to address a gap before discharge day.

For context on current economic conditions affecting both household finances and insurance markets, read the September 2026 Market Review.

A Final Note on Timing

The resettlement period is listed officially by the MOD as the two years before and after you leave service.

That window is longer than most people realise, and it exists for a reason. The financial decisions described in this checklist take time to implement properly. The pension commutation question needs modelling. The protection application needs underwriting. The housing decision needs a mortgage in principle. None of these can be rushed safely in the final fortnight before discharge.

Start twelve months out. Use CTP. Use your Service Resettlement Adviser. And speak to a specialist who understands military finances before you need to.

Frequently Asked Questions

What happens to my AFPS 15 pension if I leave before age 40?

Normal Pension Age under AFPS 15 is 60. If you leave earlier, your pension is deferred to your State Pension Age.

You will not receive any pension income until that point unless you qualify for the Early Departure Payment, which requires both 20 years of qualifying service and being at least age 40 at the point of discharge. It is essential to model your expected income in the years between discharge and State Pension Age when you plan your finances.

Do I lose my death-in-service benefit as soon as I leave?

Yes.

If you die in service, your spouse, civil partner or eligible partner receives a tax-free lump sum of four times your final pensionable earnings.

That benefit is linked to your active service. On discharge it ends immediately, and no civilian employer is obliged to provide an equivalent. Arranging personal life insurance before you leave is the straightforward way to maintain that level of family protection.

Can I use my Enhanced Learning Credits after I have left the Forces?

You can use Enhanced Learning Credits for up to 10 years from your last day of service.

However,

registration cannot be done post-discharge.

You must register while you are still serving. If you have not registered and you are approaching your discharge date, do so immediately through your unit Learning Centre.

Why can’t serving military personnel get income protection?

Income protection insurance is designed to replace salary if you are unable to work due to illness or injury. Insurers will not offer this product to serving military personnel because the occupational risk, including deployment, combat, and physical training injury, makes the policy uninsurable on standard terms. Once you leave and take up civilian employment, you become eligible. Arranging income protection should sit high on your checklist in the first months after discharge, particularly if you have a mortgage or dependants.

When should I start the financial side of resettlement?

The MOD formally defines the resettlement period as the two years before and after you leave service.

In practice, the financial decisions, particularly pension modelling, protection insurance applications, and housing planning, benefit from being started at least twelve months before your discharge date. Several of them, including ELC registration and commutation decisions, have hard deadlines that cannot be extended. Starting early gives you the time to make considered decisions rather than rushed ones.