Money Box Live: Armed Forces Finances

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0:30originally deposited, and any profit you might have made. This is not a recommendation or offer to buy, sell, or attain any specific investment or service. Fall tastes better with better ingredients from Whole Foods Market. No added growth hormones or antibiotics in their meat department means slow-braised short ribs are even more satisfying. All seafood is wild-caught, like their vibrant sockeye salmon or verified responsibly farmed. and all sweets, including fall-themed cookies, are made without high-fructose corn syrup. Spice up fall at Whole Foods Market. Hello.

1:07Felicity Hannah: For today's Moneybox Live, we're doing something quite different. There are 126 ,440 fully trained, full-time people serving in the military in the UK. It is so much more than a nine till five, not just in what you do day to day, but the impact on your family and on your finances. Come on, lads and ladies, let's keep going, keep pushing. It is very hot, but the Duke of Lancaster's regiment are training hard. It's used for reconnaissance, so we'll ID a target with this drone. We can ID targets from high up without getting seen. They're here carrying out drone training. This is the absolute cutting edge of military technology.

1:48Felicity Hannah: Here at Wheaton Barracks in Preston, we'll find out how finances in the armed forces work differently to civilian life, both the benefits and the challenges. And throughout the programme today, we'll hear from serving soldiers and veterans on exactly that. Come on, lads and ladies, let's keep going, keep pushing. I'm sorry to interrupt your training. You look absolutely like you're working hard. I'm trying to. Can I ask who you are and what you're doing? I'm Lance Corporal McCauley and I'm doing fizz with my company. What I'm trying to find out is how different is army life to civilian life? I'd say it's quite different.

2:24It's a lot more structured, especially for those who join young as well. I joined at 16 and it's mental having a grand in your pocket every month.

2:32Felicity Hannah: Do you think there's a certain amount of you don't have to think about bills in the same way or kind of managing your finances in the same way while you're in the forces? I think it takes a lot off us. It takes the money out of your pay already for the accommodation. There's a lot of things that you don't need to worry about that you would on Civvy Street. Do I need to let you get back to shifting some weights around? Probably. We call the kid going! Push it! So you've been volunteered to talk to me because your squats aren't deep enough? Apparently so, yeah. What do you think is the biggest financial difference then in military life compared to, I don't know, your friends at school who are in different careers?

3:09Honestly, it's probably just getting to work. Especially if you live on camp, you wake up and you're already at work rather than my friends on CV Life, they've got to travel to work either on the train or spending money on petrol all the time.

3:22Felicity Hannah: And is it good to wake up and be at work, or bad? If you've got an early start, it's good. If you've got a late start, it's not very good, you know? I don't want to interrupt you while you're doing burpees. Oh, it's fine. It's all good. You've given me a little break, so I'm happy. What do you think is the biggest financial difference to Army life? There's a lot of benefits that you do get from the Army. So all your health care, your dental, gym memberships, like the training facilities that we're using here, we don't actually need to pay for. And there's a lot of times that when you do get deployed, you get extra allowances and that.

3:55So there's times where you don't actually need to spend your money whilst in the job.

4:00Felicity Hannah: And I suppose if you're deployed, it's much harder to spend your money anyway. Yeah, definitely. So if we go away and say for instance you deploy for like six to eight weeks, the armour pretty much covers everything from your food, your accommodation and you've not really got the chance to spend your money. So once you've finished with that deployment wherever you've gone, you then come back home to quite a decent lump sum. Come on lads and ladies, let's keep going, keep pushing. Do you ever think about when you come out how different it might be and how it might be different to manage your own finances?

4:28Oh, definitely. But I think with what you have to manage as you go further in your career, you sort of get to grasp with it. And before you transition into civilian life, you get a lot of help with all that sort of stuff. So there's no shock to the system when you do leave.

4:41Felicity Hannah: Well, now I'm back in the studio and I cannot tell you how hard those men and women were working. They were dripping sweat. It was incredibly impressive. In today's Moneybox Live podcast, we are looking at armed forces finances from when you join up to when you leave. Later on in the programme, we will hear from the Minister of Veterans and People. Before then, I'm joined by today's experts. Anne Griffiths is the Royal British Legion's Head of Policy and Research, Kate Gannon, who is Vice President of the Personal Finance Society, and Sergeant Cameron Eden, who's a British soldier, army soldier, and the creator of the Savvy Squaddy, a financial education platform on YouTube that helps service personnel manage their money.

5:22Felicity Hannah: Hello, good to have you all with us. Hello. Cameron, thank you. Hello, Cameron, let's start with you. Do I need to call you sergeant is my first question, but assuming I don't have to. When I was researching this programme, a lot of soldiers told me I had to contact you. So there is clearly a real need for financial information that is specifically for the armed forces community. Yeah, thanks for having me on. And Cam or Cameron is just fine. Good to know. You don't have to call me sergeant. But yeah, definitely. I've been doing this for about four or five years now and it's just growing arms and legs.

5:54And it's been great to see the real positive impact it's had on the lives of service personnel.

6:01Felicity Hannah: Let's go back to the very beginning then. Tell us a bit about how pay works, Cam. Is there a starting salary? Are there pay bans? How is it different for soldiers and officers? Yeah, of course. So the starting salary for, let's say, a private soldier going into trading is£27 ,000 just over. after tax that's about 1900 pounds a month uh and that that also include um that also includes uh the junior soldiers uh who joined the army at 16 that pay is then divided into four different supplement rates so um the more skillful a role is the higher they get paid so two people of the same rank um if they're in two separate roles with different skill sets then they'll be on different pays.

6:44The pay also has increment levels. So every year, there'll be bump up an increment level and can receive a little bit of a pay rise as well. And to put that into perspective, a brand new private soldier who, as we heard, they might not have any financial obligations. They're utilising the benefits like subsidised accommodation. According to the IFS income distribution calculator, on a salary of£27 ,000, they're actually better off than about over 50 % of the UK population in terms of disposable income.

7:12Felicity Hannah: OK, but there is, of course, Kate, a risk that goes alongside military life. Talk to me about products like life insurance, critical illness cover. Does that cost soldiers more or is it provided? It very much depends on the situation. I mean, the armed forces have their own compensation scheme and they have a death in service within the military while they're serving. But when they're looking at other aspects, such as life assurance, accident and critical illness plans, often providers will want to have a sort of like a structure and look at what potential risky situations or whether they're working offshore have to impact the premium.

7:51So they

7:51Felicity Hannah: would need to look at a financial planner to maybe look and get a best premium for them. Thank you. And some of those soldiers I was speaking to seemed pretty upbeat about their finances and about their finances when they come out of the forces. What do you find at the RBL? Is it hard for some people to make the switch? Yeah, most people do very well when they leave service, but it can be hard for those, particularly who've left suddenly or in an unexpected way, for example, through medical discharge. Or people who've had additional challenges while they were serving, like moving around a lot, which might have affected their spouse or partner's employment opportunities or caring responsibilities as well, all of which can add up to later financial difficulties.

8:30Felicity Hannah: And we'll talk about some of those difficulties shortly. And we often hear about the Armed Forces Covenant, don't we? The promise that everyone will be treated fairly, no one will be disadvantaged as a result of their service. And there is a Financial Services Covenant as well. Can you explain what that is, what that means? Yes, the Armed Forces Covenant was put into law as a result of campaigns that the Royal British Legion ran. And it does make a promise by the nation and the government that everybody who serves or has served in their families should not be disadvantaged as a result of their service.

9:04And also for some who are injured or bereaved, who've given the most, that they can have special consideration. Some financial services firms do sign up to the Armed Forces Covenant, but we don't find that across all financial organisations. organisations so there are still products and services that can be inaccessible to some people who are serving or people can find that there are barriers to things like sustaining home insurance, mobile phone contracts when they move around or abroad.

9:31Felicity Hannah: But if a firm has signed up to it then for example if an insurer has signed up to it then if service personnel are posted overseas they might be able to say cancel their car insurance policy at short notice and not have to pay fees. Yeah we'd encourage all firms to sign up to the Unforces Covenant and work with the community to make sure that they're not disadvantaged in that sort of way. Thank you. OK, well, a military career can be a very challenging job. It puts pressure on the people who join up, but as Anne was saying, also on their families. Every year, a number of them will leave the forces because of that pressure.

10:03Felicity Hannah: The army, of course, wants to keep its highly trained people. And one way it encourages them to stay is with a retention bonus. Let's hear from a soldier who just got his. My name's Kingsman Tot, 1st Battalion Duke of Lancaster's Regiment. I've been talking to a lot of people today about the way that army finances are different to civilian finances. And I think that you've had one of those examples yourself. You've had a retention bonus. Tell me about that. It's quite a good thing, in my opinion, especially if you're planning on staying in the army. I knew I was staying in anyway, so at the end of the day, from my point of view, it was just an extra£8 ,000, but it can be a big difference.

10:37Felicity Hannah: And how long do you have to stay to get that retention bonus? You get the£8 ,000 on an agreement of signing back on for another three years. If you're staying in anyway, it's just an extra£8 ,000. Can I ask a question? And you don't have to answer it. What are you going to spend yours on? £8 ,000? So I've already spent mine. I bought a car with it. Cameron, what should Forces personnel consider with the retention bonus? Because it's nice extra cash. It's good if you need a car. It does tie you back in. Yeah, my hands almost went to my face then when I heard he bought a car. He might have needed a car.

11:09I wouldn't want to be down on his choice. I would say if people are receiving that sort of money, having some financial goals is always a good step because it allows you to allocate that money more easily and effectively. So certainly if someone getting that retention bonus allocated towards some debt, saving for a deposit on a house or an emergency fund. But I am also very pro having fun and utilizing the money you've earned. so I wouldn't put all of it to a side. I'd definitely leave some of it to then, you know, perhaps then buy a car with the remainder or go on a holiday or enjoy some of it.

11:47Felicity Hannah: Yeah, particularly perhaps with younger people, do you think it's quite tempting to just have an amazing holiday or what do they call it in the army? A millionaire's weekend? Yes, yeah. And from my experience, a lot of young people with a lot of the disposable income that they have, they will often go out and they will go and buy a brand new car on finance because they have a lot of disposable income and it's not necessarily the best thing to do at such an early stage in their career and life, they could do a lot of other useful things with that money. It's not just retention bonuses, Cam. Is it personnel can also receive a tax-free lump sum when they do eventually leave the forces?

12:21Yes, there's sort of three lump sums. So if someone leaves after 12 years, but doesn't quite make it to a full career, they can have what we call the recessive grant. And that's around£15 ,000 tax-free, but they must serve at least 12 years. If they do make it to sort of the full career point, there's something called an early departure payment. This is a benefit linked to the pension scheme. And depending on the type of career they've had, this could be anywhere between about maybe 30, 40, 50 ,000 pounds tax-free from when they leave the forces, usually in their 40s. To earn that, though, you must serve 20 years of service at least and be 40 years old or over.

13:00We call it a 20-40 point, both criteria must be met to earn that and it's there as a sort of a retention like an extra retention bonus and then finally at state pension age when the deferred pension comes in you can a service person can essentially permanently sacrifice a portion of their pension income and create another tax-free lump sum at when the pension is finally due.

13:22Felicity Hannah: So lots to think about. Kate do you think perhaps those lump sums potentially stop soldiers from saving their money because they can kind of look ahead and rely on that lump sum payment coming in? Yeah, that's a very good point. And one thing that I did pick up at the start was that some people think that, you know, when they're deployed, that they have a lot of money and they don't really know what to do with it when they get back home. But a lot of military personnel, in my experience, consider their retention bonus as a savings plan. But if they were to link up with a financial planner local to them, you know, as they're working and building up, then a cash flow plan will be done with them, with a financial planner and give them the goals to look at achieving outside of this and probably save some more tax, not just get a tax-free lump sum by putting money aside from their pensions and whatever, but actually working and making their money work harder can sometimes make them 7%, 8%, 9%.

14:22Whereas if they just pop it in their bank account, they can be earning nothing at all.

14:27Felicity Hannah: Thank you. Somebody who doesn't want to give their name has messaged us on WhatsApp with quite a long list, actually, of positives and negatives. I'm going to share one of each. So here's what they say is a challenge. They say difficulty keeping apps, especially banking apps, up to date when deployed, because they're usually designed on the assumption that the handset has access to mobile data. Not always the case, depending on where serving, for example, ships and submarines. And a positive, they say, are initiatives like blue light and defense discount cards, which offer great value across a range of products.

15:21risk of losing more than the amount originally deposited and any profit you might have made. This is not a recommendation or offer to buy, sell, or attain any specific investment or service. Fall tastes better with better ingredients from Whole Foods Market. No added growth hormones or antibiotics in their meat department means slow braised short ribs are even more satisfying. All seafood is wild caught like their vibrant sockeye salmon or verified responsibly farmed. and all sweets, including fall-themed cookies, are made without high-fructose corn syrup. Spice up fall at Whole Foods Market.

15:59Felicity Hannah: Thank you very much for sharing that. Cameron, how does housing work in the Army? Because we heard from that soldier at the start, he gets to live at work. Do people pay for their accommodation? Yeah, so there's sort of two types. There's the single living accommodation. This is for those who are single, not necessarily married or have kids, and that accommodation is usually situated on camp, the higher tier of these would be like an en suite bedroom and you'd pay around£100 a month. Then for the married families with kids and that, you can get two, three, four, five bedroom houses depending. And these are also heavily subsidised.

16:35So the subsidies are around 80%. So as an example, I live in Winchester, quite an expensive place, and my military accommodation is£400 a month for a three-bed house with my family. So it's very cheap. And that does allow us a level of disposable income that our civilian counterparts wouldn't necessarily have when they have to pay full rate for private rent or mortgage, etc.

16:57Felicity Hannah: OK, but Anne, potentially less choice of accommodation. What can people do if they're not happy with what they're being offered? Because you do hear stories, don't you, of really run down rooms and accommodation? Yeah, and serving personnel and families are, we believe, entitled to the highest quality housing. And it is a priority that the government delivers on its commitment to address some of the challenges that have been there in terms of maintenance and the availability of houses that are of a quality that our personnel and their families deserve. the Royal British Legion is there to support people who have challenges with maintenance with housing household goods and we do give out last year almost 20 ,000 grants to people for a range of issues including those with their homes.

17:46Felicity Hannah: Okay what then about buying a home because there is also a help to buy scheme specifically for the armed forces here's someone who told me they'd used it. So I'm Company Site Major Lewis Young. I'm in charge of Burma Company, which is part of One Lanx, currently based in Wheaton Barracks. I was introduced when I was just about to purchase a house to Armed Forces Help to Buy, which is a scheme where the army gives 50 % of my annual salary, enabling me to put a larger sum of money into a deposit for a property. And then from there, that's paid off over 10 years. And what did that mean for your ability to buy a house?

18:25I mean, it really helped. It just allowed us to essentially not borrow as much on the current APR that we had for that property.

18:33Felicity Hannah: Do you think that it also encourages them to stay in the army at least a decade? Yeah, I mean, ultimately, from when you take it, you've got to repay that money back. There is some certain things like if you decide to get out early, then you have to pay all that off before you can get out. But yeah, I think that commitment of having to pay that over that period of time almost pushes people into a bigger and better career in the army than if they didn't have that commitment. So that helped to buy scheme. It's a scheme where service personnel can borrow up to 50 % of their salary, up to a maximum of£25 ,000.

19:08Felicity Hannah: It's interest free as long as it's put towards the purchase of a property. They have to have more than six months left to serve at the time they apply. and then it's normally repaid through their salary over a period of up to 10 years. So quite helpful for people who are able to use it. Next up then, I spoke to Lieutenant Lewis Baird. He is part of the staff and person support branch, which he told me was like the HR department for soldiers. For full-time regular service personnel, there's a thing called X Factor. And this is basically, on top of your core salary, it's 14.5%, which is given to you to compensate for the difficulties of service life.

19:43So, for example, the idea that you might be moving around every two years or you might be deploying for months at a time, that's given to everyone in the full time regular army. And that's, you know, it makes it a pretty competitive wage.

19:53Felicity Hannah: You've got lots and lots of young people, especially in the army, not always notoriously good with money. Like, do you see perhaps some of the young men and women finding themselves in difficulties just because they've never had a steady paycheck before? Yeah, absolutely. I've got one member of my team is 16. So that's like the youngest you could possibly be joining a regiment. because we do have lots of benefits and allowances. People feel like they've probably got a lot more money than they actually do. And obviously that can lead to a lot of spending. So the main message is be responsible for your finances.

20:22If you do need help, they would come to my team and ask for an emergency payment in cash or whatever that might be.

20:27Felicity Hannah: And I suppose if you're married or in a relationship and you're moving around a lot, it makes it harder for your partner to work. What I see from my own personal life is, you know, if your partner is moving around every two or three years, how could you build a career? If you're a teacher or whatever, a doctor or nurse, you know, it's quite easy. But in my own personal life, I think my partner would struggle to do that. And you've carried out research into how the armed forces community feel about their finances. What stands out? Yes, in research that we did with over 3 ,000 people in the armed forces community, about one in 10 of them said that they were finding it difficult, either themselves or within their family, to afford bills and to afford essentials.

21:05And about one in 25 said that problem debt was an issue for them. And in the MOD's own surveys of serving personnel, that debt figure is actually higher. So it's about one in 10 personnel say that that's a worry for them. It's one of the reasons why the RBL is introducing a new service to encourage people to reach out for support with income maximisation, because there's a lot of help that we provide already around things like debt and accessing benefits. But earlier intervention and preventative support to address problems early on is very important too.

21:38Felicity Hannah: And Kate, people can get support then through the RBL. They can get support through their regiment. There is also a national offer of free financial advice. Tell me about that. Absolutely. So the Personal Finance Society offers something called the Money Forces Plan or the Forces Money Plan, should I say. And it's a pro bono free confidential financial guidance to serving armed forces, personnel, veterans and their families through a range of PFS, volunteers and financial planners. And we've got over 500 consultations that we've done over the last nine years. And what our profession is doing is is committing to the public benefit.

22:17We're giving the forces access to trusted financial guidance and we're supporting them amongst their unique challenges that they face, you know, while they're in or out of the service.

22:29Felicity Hannah: And as we've been discussing, they're very unique challenges. And earlier today, I spoke to the Minister for Veterans and People, Calvin Bailey. He's a former RAF officer himself. And I began by asking if it's good enough that only 37 % of people in the forces say that pay and benefits are fair for the work that they do. I served 25 years in the service and certainly for the last since the 2010 spending reviews, the service pay was not matching inflation and it wasn't meeting the challenges that service people face in the outside world. Since coming to power, this government has put a big focus on making sure that we recognise and acknowledge the contribution that our service people and their family make.

23:14And in doing so, we've given them three above inflation pay rises, 4.5 % in 2025, following a 6 % in 2024, meaning that there's been a cumulative increase of about 14.1 % since July 2024. So we are on a journey. It has been important that our average salaries now are around 45, just over£45 ,700. But there is more to do. For the first time, we're seeing a growing force because fewer people are leaving. And we are meeting the pace that we intend for growing the forces as a whole.

23:57Felicity Hannah: You mentioned retention. I want to talk about that because the defence think tank, RUCIS, told us that it is an issue. It has improved. Some of the reasons people leave are clearly financial. So the main factors are the impact of service life on family, opportunities outside of the forces, but then a partner's career and also pay. Are you doing enough, do you think, to keep your highly trained people? What you highlight is one of the quandaries that we have. As someone that was serving myself, Sometimes it's only when you leave that the benefits that the service give you become apparent. And every time I meet our service people, young and old, I was at Perbright a couple of weeks ago.

24:37And I said to the young people that I met there, look, like be aware early of how much your pension is worth and how much in real terms you are saving in your pay. Because at some point you'll want to go and buy a nice car or, you know, have nice things. But if we are not aware of the benefits that we are given as well, at some point you will start to look away. And it's only when you leave that you realise that your Armed Forces Railcard is giving you and your members of your family independently railfares that are two thirds abated. that you have never had to worry about accommodation when you are working away from your family, because not only are you getting the accommodation, but you're also getting the train fare and travel allowances to get you there to and from your work.

25:30And there is, as I said to, again, the young people at Purbright, when they're paying£130 a month there or thereabouts for food and£120 a month on accommodation, that is a pretty good offer in comparison to what their friends are on on the outside are paying and so the big part of the challenge is making sure that we're explaining to service people all of the unseen benefits that they're getting that when they are released from the shackles of service become instantly apparent to them and i can speak very personally about this that you become aware of them when you leave and you say, oh my God, like they were doing that for me and I never recognised it.

26:15Felicity Hannah: Before you go, I must ask you about some recent news stories, forces pensions. In the last few days, there have been news reports of hundreds of veterans being accidentally overpaid their pensions and now having to repay quite potentially large sums, despite not having done anything wrong themselves. Some people have been told they have to repay tens of thousands of and it could significantly affect their finances. What would you say to those affected people who might now be struggling? Well, so the first thing that's important to say is that I'm sorry that they and we have arrived at this position.

26:48I recognise that receiving the totality of the error in one letter will be something that people will find quite difficult and shocking. And that is never a position that I want to see our service people in. I have directed that we have an investigation, but I want to assure people that whilst that investigation is underway so that we can understand how and why this occurred fully, that those people that are impacted should rest assured that we will work with them to make sure that we have tailored repayment plans, that the way in which we address this will be manageable. and I hope to be working closely with all of these people.

27:32I would steer them towards our veteran services and to the helplines that are available and we will do all we can to make sure that our response to this is as empathetic as it can be. But I have to be honest to say that, you know, we have a responsibility to the taxpayer to recover this money in some way, shape or form. But I hope we do that in a way that is reflective of the service of those people that have been impacted.

27:58Felicity Hannah: Calvin Bailey there. Do let us know if you've been affected by that overpayment issue. It's moneybox at bbc.co.uk. But also, there's been so much to talk about today with Forces Finances. We have hardly touched on veteran finances. We do want to look at that in more depth later this year. So if you've got a story or a thought about financial life after the military, do get in touch and let us know. I think we should wrap this programme with Cameron, the savvy squaddie himself. Cam, we've talked about pay, perks, all the financial aspects of force's life. But this isn't an ordinary job, is it? It can be a very dangerous job.

28:32Felicity Hannah: Is army life about more than the money? Yeah, I think so. I think most people who join don't join because of the money. And overall, like what we do, you know, we have a positive impact on society. It's about giving back to the community, about being part of something bigger. The education and qualifications on offer and that are available to service people. The opportunity is for sport and adventure training and travel, just the people that we meet and work with. And at the end of the day, you know, if and when it does come to, it is also about defending the country if and when we need to. Thank you.

29:07Felicity Hannah: And I would also add the website, discovermybenefits.mod.gov.uk has got lots more information on the finances. Well, that is all we've got time for in today's Moneybox Live podcast. Thank you to the fantastic men and women of the Duke of Lancaster's regiment. And thank you to today's expert contributors. We've been hearing from Sergeant Cameron Eden, also known as the Savvy Squaddy, from Anne Griffiths from the Royal British Legion and Kate Gannon from the Personal Finance Society. Remember, there's no Moneybox with Paul Lewis this Saturday. Both our programmes will be back in four weeks. We are still hard at work on the stories that matter to you.

29:43Felicity Hannah: And if there's a topic you want us to take a look at, then here's Lance Corporal Morgan to tell you how. If you have a story you want Moneybox to look at, then get in touch. You can email moneybox at bbc.co.uk. You can also send a voice note or message to them on WhatsApp. The number is 033 067 83 183. They really do read and listen to every message. Thank you, Lance Corporal Morgan. We really do. In this podcast, the producer was Craig Henderson. The studio manager, Toby James. The production coordinator was Jackie Johnson. Our editor is Jess Quayle, I'm Felicity Hanna and this was a BBC News Money and Work production for BBC Sounds.

30:20Felicity Hannah: Have a very lovely summer. Christmas 1988. A plane takes off from Heathrow Airport. 38 minutes later, everyone on board is dead. A Libyan man, Abdul Bassett al-Megrahi, is convicted of murdering 270 people. But that's not the end of the story. Almost four decades on, fresh evidence and a new trial. I'm Miles Bonner. In this podcast, I'm delving into a world of extremist groups, mysterious intelligence agents and global politics. From Radio 4, this is Intrigue, Lockerbie. Listen first on BBC Sounds.

31:22www.acsa.xl.com

31:33Thanks, Axel.

32:03all in one place. Visit schwab.com to learn more.