The pensions service is provided by billion dollar US IT multinational Computer Sciences Corporation (CSC) and the employees involved are ex-Ministry of Defence (MOD) staff working on the Department's IT under contract.
Despite its size and pre-tax profits of over $1bn (£668m), the company has offered its workers a pay rise of just 9p an hour, which equates to less than 0.5% for 2014/15.
The PCS union members have called the pay offer "obscene and insulting" and have been working for the past two months to rule in opposition and will now strike for five days.
They have also threatened further strike action if CSC refuses to amend the issue.
"It is nothing short of obscene that this billion dollar company is offering staff such an insulting pay increase," claimed PCS general secretary Mark Serwotka.
"These workers are proud of the work they do for the armed forces but they are not even being given crumbs from the table by this eye-wateringly profitable US firm," he added.
CSC is an organisation that has already attracted controversy in the UK following its involvement in the failed National Programme for IT (NPfIT).
Under NPfIT, it was responsible for supplying and delivering the Lorenzo Electronic Patient Record (EPR) system.
In June 2013, the Parliamentary Commons Public Accounts Committee (PAC) referred to the firm as a "rotten company providing a hopeless system."