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The overall remuneration package for Armed Forces personnel consists of the following elements: basic pay, an additional payment called the “X factor”, additional/specialist pay, taxable and non-taxable allowances and charges. The overall pay that an individual receives will depend on their own personal circumstances and eligibility for specialist pay and allowances. Pay comparisons, even across the same rank, are therefore difficult.

The levels of pay and charges are set by the Government based on recommendations by the Armed Forces’ Pay Review Body (AFPRB), which is independent of the MOD. The basic principle is that the packages of Service pay and charges must be fair in relation to those applying to civilian occupations; while at the same time addressing issues of recruitment and retention. Basic pay is therefore maintained at levels broadly comparable with those received by civilians in similar occupations. However, in making its recommendations the AFPRB is obliged to consider the funds available to the Ministry of Defence, and the Government’s overall inflation target.

In January 2016 the MOD introduced a new system of basic pay, as part of its ‘New Employment Model’ review. This replaced the previous system which the Government said was overly complex and inefficient. The new system has been described as “simpler and fairer”; while pay protection was introduced to ensure that no Service personnel would take a pay cut on transition to the new pay model. The new pay model did not, however, affect allowances or additional/specialist payments. The new system came into effect on 1 April 2016.

The Government-imposed pay freeze meant the base pay of only those earning less than £21,000 was increased in financial years 2011/12 and 2012/13. The AFPRB recommended an increase of 1% in base pay across all ranks in 2013/14, 2014/15, 2015/16 and 2016/17. It also recommended that from 2013/14 the “X factor” should be increased by 0.5 percentage point from 14% to 14.5%.

In its latest report, which was published in March 2017, the AFPRB recommended a 1% increase to all military salaries, which was subsequently adopted by the Government and came into effect on 1 April 2017.

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