Perhaps if all else fails your wife might well 'feel the need' to state a 'claim' direct to MOD for half the pension and half the terminal grant before it is paid out to you.
In which case you might as well write this money off to Dorothy Perkins I expect.
Not that I am suggesting that this is a solution - but you would be far better off if you and your wife were to separate! I suggest that you get your IP to write to creditors and explain that this money is needed for resettlement, and to fund yourself until you find a new job. Not easy - it took my husband 18 months to find suitable employment after the completion of his 22 years service in 1991 - at the depth of the last recession, and things are not great now in the job marketplace, and therefore it should not be treated as a windfall.
Such a shame that this was not addressed at the outset - I do this for all of my HMF clients and it is a warning to any new posters in this situation to be careful of.
Melanie, all you have been a great help and have given me answers that I felt my supervisor failed to answer clearly. Today I spoke with the manager of the supervision department who will give the definitive answer tomorrow.
I think though I have an answer and my instinct is telling me to leave early take the 10K resettlement payment which I will be able to argue. Join what is called the Military Provost Guard Service (MPGS), I will loose 10k in annual pay but will serve on a 3 year contract whilst in this contract I have the option to continue my pension from the rank I left the regular Army or start a fresh in the MPGS at there rank which is at the very bottom hence the 10k pay cut.
However this is certainly an interesting topic and will keep you posted on how things progress.
That seems a sensible way forward - and the argument you will use to keep your lump sum is that it is needed to supplement the reduction in your salary.
Do let us know how you get on. I have some friends serving in the MPGS, and it does seem a worthwhile job - unless you get posted to Aldermaston, which I gather is a bit of a chore!
