Massive changes in CETV value
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cambb
Posts: 219 Forumite
Hi,
I'm in the process of transfer out of my DB scheme ( hopefully the money will be transferred tomorrow to the Pru) but i still have access for the time being to the pension portal and the DB valuation.
On the 30th June my Valuation was £549k however I checked today before i lose access and the valuation has dropped to £456k. I've transferred out at £522k.
Any ideas how it could fluctuate so much? It does say its only an estimate but I've spoken to a couple of colleagues and their pensions have also dropped.
I'm in the process of transfer out of my DB scheme ( hopefully the money will be transferred tomorrow to the Pru) but i still have access for the time being to the pension portal and the DB valuation.
On the 30th June my Valuation was £549k however I checked today before i lose access and the valuation has dropped to £456k. I've transferred out at £522k.
Any ideas how it could fluctuate so much? It does say its only an estimate but I've spoken to a couple of colleagues and their pensions have also dropped.
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I've just transferred over to Pru, and had Willis Towers Watson try pulling a fast one by saying the rates had dropped and thus transferred over less than agreed.
Note:
Luckily the Pru were onto this little scam and got it resolved.
My FA at our last meet said he'd ad a few CETV quotes drop recently.0 -
for one thing, the FTSE has dropped 200-odd points in a month, would have an effect on any uk-based equity holdings the pension trustees hold..........Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
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Does the UK have a statutory or regulated discount rate used to calculate CETV. In the US the tax authority (IRS) regularly publishes a set of time segmented interest rates that pension administrators use to calculate CETV on defined benefit pensions, prior to that it was the 30 year treasury rate.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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Hi
Finally, my DB transfer journey will come to an end next week with 938k transfer. Until the transfer happens, I can continue to see the CETV details live on MercerOneView. The rate in late 2015 was 752k then after a number of increases moved up to in March 2017 938k. The figure has moved up and down slightly over the last few months and currently sits at 930k.
I think the only way is now down, due to market conditions and also pending increased regulations/rules from the Pension regulator/FSA. I have always been mystified why some CETV schemes are falling but other were still increasing... I suspect this will be listed as another mis-selling scandal in years to come.0 -
bostonerimus wrote: »Does the UK have a statutory or regulated discount rate used to calculate CETV. In the US the tax authority (IRS) regularly publishes a set of time segmented interest rates that pension administrators use to calculate CETV on defined benefit pensions, prior to that it was the 30 year treasury rate.
Good question. I never really got a straight answer from Mercer or the Pensions director of the company holding my DB pension. At times I felt like I was being fobbed off. My only comparison is what other say they were being offered and checking with a few online calculators ref the min/max CETV.0 -
bostonerimus wrote: »Does the UK have a statutory or regulated discount rate used to calculate CETV. In the US the tax authority (IRS) regularly publishes a set of time segmented interest rates that pension administrators use to calculate CETV on defined benefit pensions, prior to that it was the 30 year treasury rate.
No.
The initial transfer value should be a best estimate of the cost of just providing the benefits. Trustees are responsible for the values offered but are expected to take actuarial advice.
The discount rate will typically be driven by the investment strategy of the scheme so will be higher for a scheme with higher levels of equity investment, compared to say a scheme which is heavily invested in government bonds.
Some guidance to trustees here:
http://www.thepensionsregulator.gov.uk/guidance/guidance-transfer-values.aspx0 -
I think the only way is now down, due to market conditions and also pending increased regulations/rules from the Pension regulator/FSA. I have always been mystified why some CETV schemes are falling but other were still increasing... I suspect this will be listed as another mis-selling scandal in years to come.
Not really on the mis selling scandal, that group just wants to have their cake and eat it. Anyone who transfers out of a DB pension scheme to get a lump sum transfer should not have a single drop of sympathy for them should they get into troubles like running out of money or not getting what they expect, So it is not really mis-selling scandal here.
You only need one major market crisis and then they will come out of the woodwork on this forum and complain.0 -
JoeCrystal wrote: »Not really on the mis selling scandal, that group just wants to have their cake and eat it. Anyone who transfers out of a DB pension scheme to get a lump sum transfer should not have a single drop of sympathy for them should they get into troubles like running out of money or not getting what they expect, So it is not really mis-selling scandal here.
You only need one major market crisis and then they will come out of the woodwork on this forum and complain.
I think there is a real lack of transparency on how the figures are calculated. Imagine this were a redundancy situation - the employee would be given the complete calculations. As I mentioned in my own case, Mercers and the Head of Pensions for my ex-employer could not explain to me how my figures were calculated only that the level of CETV was one of the highest in the industry. Having read the offers that some forum members are being offered - how can there be so much variation in CETV values? As you mention in years to come when some folks run out of money they will grasp at anything to raise a claim. To a certain extent the industry is not helping itself by not being transparent or consistent in how it calculates the CETV.0 -
Looking at the two values the difference is one includes "Post April 1988 GMP" which is £950 and the other one hasn't got it on for some reason?0
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I think there is a real lack of transparency on how the figures are calculated. Imagine this were a redundancy situation - the employee would be given the complete calculations. As I mentioned in my own case, Mercers and the Head of Pensions for my ex-employer could not explain to me how my figures were calculated only that the level of CETV was one of the highest in the industry. Having read the offers that some forum members are being offered - how can there be so much variation in CETV values? As you mention in years to come when some folks run out of money they will grasp at anything to raise a claim. To a certain extent the industry is not helping itself by not being transparent or consistent in how it calculates the CETV.
Schemes all have different levels of funding. Some in surplus , others in deficit. Also differing levels of liability in terms of deferred membership. Very to simplistic to assume that there should a standard calculation.0
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