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<p>The Armed Forces Pension Scheme (APFS) is, like the majority of public service
pension schemes, an unfunded scheme. As with all unfunded pension schemes, they are
paid for only by the taxpayer and have no cash or investments to fund pensions in
payment or past liabilities. As such, increases in interest rates will not reduce
the Ministry of Defence (MOD)'s historical pension liability for the AFPS, which is
driven by the SCAPE (Superannuation Contributions Adjusted for Past Experience) discount
rate and other assumptions set by His Majesty's Treasury and MOD.</p>
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