Please advise occupational pension transfer value down nearly 25% in 1 year !!!

alkalo

i am emigrating to west africa where i have a home . the cost of living is exceptionally low there so i dont need a kings ransom to see out my days but this pension would go a long way to providing for my living expenses

MikeJones_2

hi alkalo,

alkalo wrote: »

...the insuffiency report on which this reduction is based was carried out with a valuation date of 5 april 2007 - this coincided with last scheme valuation

Interesting. What immediately comes to mind is that I can't recall the term 'insufficiency report' being mentioned prior to the new regulations being issued with effect from 1st October 2008. Whilst a scheme valuation might well have been conducted in April 2007, it would be interesting to see whether that would constitute an insufficiency report.

I'll look into further, and come back with further comment in due course (but likely to be next week).

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

tawl_2

members have to realise that taking a transfer value is an option. as far as the scheme is concerned, the benefits it initially promised is still there! they promised you a pension at retirement and they will honour this promise.

things are bad for everyone at the moment so hence reduction in transfer values are common to protect remaining members of the scheme when members transfer out. to be able to reduce transfer values, the trustees need to ask the actuary to do an insufficiency report where the actuary will look at the level of reduction required so that when a member transfer out, the scheme is not worst off as a result. the reduction is not permanent and when and if things improve, full transfer values should be provided (probably be looked at the next actuarial valuation of the scheme).

members who have already retired are given priority over other members. therefore the reduction will be highest for members who have not retired.

a pension scheme is there to provide a pension in retirement and is not a savings vehicle to realise as much cash as possible. there is nothing preventing you from taking early retirement but of course your benefit will be reduced to take account for the fact that you are taking your pension earlier than the scheme normal retirement age (and therefore be paid for a longer period).

No foul play or trying to fool the members there!

MikeJones_2

Hi tawl,

Some general observations (and nothing personal):

tawl wrote: »

...members have to realise that taking a transfer value is an option.

...as well as a statutory right for most people (date of leaving/RPI matching permitting).

tawl wrote: »

...as far as the scheme is concerned, the benefits it initially promised is still there! they promised you a pension at retirement and they will honour this promise.

...so long as the sponsoring employer does not suffer from an insolvency event.

tawl wrote: »

...things are bad for everyone at the moment so hence reduction in transfer values are common to protect remaining members of the scheme when members transfer out.

The Pension Regulator's guidance (note guidance, not law) discusses this issue in some detail. It suggests that trustees consider whether reducing transfer values when (i) the employer's covenant is healthy, and/or (ii) the deficit repayment period is towards the shorter term (as opposed to the longer term) - is this a valid reason to reduce TVs?

tawl wrote: »

...the trustees need to ask the actuary to do an insufficiency report where the actuary will look at the level of reduction required so that when a member transfer(s) out, the scheme is not worst off as a result.

Agreed. But it's a shame the regulations don't stipulate the converse: that when a scheme is in surplus, members transferring out can share in the surplus.

tawl wrote: »

...the reduction is not permanent...

That's a bold statement to make in any economic climate (given the assumptions which can be made in a TV calculation), let alone one to make in a recession.

As I said, nothing personal - just an observation.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

tawl_2

no offence taken!

there seems to be a long of angst in the posts against trustees and their advisers seen to be trying to take advantage of members. i just thought it's not all that and justify why some of actions taken are actually for the good of the members and the scheme.

i should not hope a recession is permanent?