Final salary CETV

Kit_Carson

The transfer from a final salary scheme will need to be signed off by a UK IFA. Not sure that this is going to be that straightforward.

Part of the advice will look at the Type A critical yield to start with. A TV analysis is going to require details of the new fund's charging structure. This will probably mean a Canadian adviser is going to have to work with a UK adviser.

TH1878

Rrunner, I think you're underestimating the amount of work needed for:

a) A Defined Benefits transfer.
b) A QROPS transfer.

You will need a suitably qualified IFA to sign it off. I'm qualified to do both of the above but I wouldn't be touching this with a barge pole.

What was the guarantee date on your CETV? You only have three months to get all the paperwork in and this is nigh on impossible in normal circumstances when transferring overseas, never mind when the scheme member has sat on the paperwork for weeks.

atush

you said the pension was May 2012 it was at 5,910/yr, and the CETV 114K.

Well you cant buy an indexed lined pension with survivors benies at that amt with 114K so i'd say the CETV was low.

Rrunner

The guarantee date is June 30.
I'm 95% sure that I'm going to leave the DB pension in England for now. The value they've given me is well below my threshold of what I had hoped for which was closer to 200K.

I plan to request an annual CETV from Towers Watson and reevaluate as my 16 years to age 65 progress.

agarnett

The only problem with that strategy might be that the UK government / FCA seem by their more recent comments / guidance to be inviting the likes of Towers Watson to advise employers and trustees that they can make arbitrary reductions in CETVs from now on using the diversionary excuse of 'the greater good of those who remain in the scheme'.

Such mixed messages abound - first you can unseat your pension pot, but don't expect us to have unseated it that easily without you handing over a decent cut to our friends in the City who have important businesses to run and don't wish to be distracted by the baggage of any actual liabilities to keep old promises except to those malleable members who don't know the worth of the promise in the first place and haven't even thought about bailing out before being forced out on someone else's terms!

Rrunner

Yes, this is a concern.
If the values are deteriorating then I would be best to leave it as a fixed income stream at retirement. Not my first choice but also not a disaster.

FatherAbraham

Rrunner wrote: »

I have tracked down an old final salary pension that I was enrolled in from 1987-1996:
Private, 9 years in, final salary GBP33k, 1/60th factor.
Date of leaving the scheme (Oct '96) the pension was 3,891/yr
mid May 2012 it was at 5,910/yr
...
My consideration is to move it to a QROPS account in Canada where I now reside as a citizen with little to no possibility of returning to the UK.

Pros.
Control over this portion of my retirement fund, it will be a part of a retirement portfolio of about 5 strands that will see us into a comfortable retirement.

Surely you mean loss of control of this portion of your retirement fund? By leaving the DB scheme, you'll have no idea what income it will generate when you come to draw on it.

You can still point to the currency risk, of course -- a defined income, in a currency whose future value against the Canuck dollar is not defined.

Warmest regards,
FA

Rrunner

I guess what I mean is that it won't be in the control of a jurisdiction that is no longer a part of my life.
Well a small part still I suppose, I will be getting a small state pension if its still around in 18 years (or 19). But being Canada we do not have index linking on the state pension which is a bit of a downer.

I agree that I could screw the DB transfer investment up over here but that would be my doing!

Anyhow depending on some more info from TW I expect this week I expect to leave the status quo for now.

Rrunner

Heard back from TW about the CETV calculation.
From what I can decipher from the jargon it would seem that today's value is 6300/year. Increases due to revaluations are at CPI, max 5%; the value they worked on for this calculation was 2.3%

Transfers out of the fund are at a discount rate of 4.2% so this may explain why the value seems low.
Or have I misinterpreted what the discount rate means?

Then theres a bunch of indecipherables about demographic assumptions which are beyond me.
This further news would seem to reinforce the thinking of leaving it where it is.

sandsy

The discount rate of 4.2% is their assumed growth rate on the fund assets backing your pension liability, I think. Rolling forward your CETV and your revised pension value on this new info indicates they're using an effective price of about £35 per £1 of retirement income (as opposed to my guess of 30 earlier). Depending on the mortality assumptions used and the assumed yield for backing those payments, that's not impossible.