Changes in how Barclays calculate CETV

pensionsnewbie

Barclays has written to me saying that the way they calculate the benefits of the 1964 retirement scheme is changing.

'Transfer values are calculated using actuarial factors and assumptions determined by the schemes governing documentation and legislation. Those factors are changing from October 1st.'

I asked the question whether this means they will go up or down but they are unable to provide that detail, nor the rationale for the change.

Any of you clever people know why they are changing - is it a statutory thing? Good or bad?

Finst

There is no upcoming statutory need to change CETV factors. Generally speaking, CETV factors are reviewed every 3 years to ensure that they are still fit for purpose.

A CETV should be the expected cost to the scheme of providing your pension, which obviously depends on things like the expected return on assets, future inflation, life expectancy etc. CETV are dynamic, which means they automatically adjust on a monthly basis for changes in financial markets, but sometimes changes to the underlying basis are needed.

There is nothing particularly alarming about this, unless you were thinking of taking a transfer value in the near future. To be honest, I'm surprised they wrote to members, most schemes wouldn't bother (and there is no requirement to).

Without knowing what the changes are, its not possible to guess the impact (and it could easily be that some will go up and some will go down).

pensionsnewbie

Thank you - will let you know if I find out anything more>

bigadaj

Cetv values are obviously at highs at the moment due to gilt yields and prices, so it could be that this is being acknowledged that the current values could be overly generous on a longer term basis. This may result in a reduction in cetv values dependent on the scheme rules and way of valuing, though it is surprising that this has been communicated out before the process has been completed.

It wouldn't make any difference to individuals who want to take the defined benefit pension in any case, only if they want to transfer out.

agarnett

Some Barclays CETV's seemed particularly high as reported by some in this forum.

If Barclays have written, then you can be sure that someone has decided they shouldn't stand out from the crowd in the future.

Check with Unite The Union. They should have been involved in any discussions.

Bigadaj, the point is that the CETVs did appear to be sufficiently high to justify transferring out for some members.

bigadaj

agarnett wrote: »

Some Barclays CETV's seemed particularly high as reported by some in this forum.

If Barclays have written, then you can be sure that someone has decided they shouldn't stand out from the crowd in the future.

Check with Unite The Union. They should have been involved in any discussions.

Bigadaj, the point is that the CETVs did appear to be sufficiently high to justify transferring out for some members.

Yes I realise that, but that shows soemthing wrong in itself.

As db pensions then they should only guarantee a level of income for those in the scheme, the fact that the Cetvs are very high shows a problem with the calculations.

Whether people should benefit from this is a different question.

agarnett

bigadaj wrote: »

Yes I realise that, but that shows soemthing wrong in itself.

As db pensions then they should only guarantee a level of income for those in the scheme, the fact that the Cetvs are very high shows a problem with the calculations.

Whether people should benefit from this is a different question.

Well to say a great deal is obviously wrong may be an understatement - the truth of what is actually wrong may surpass your assertion!

• Who owns the Barclays pension scheme? people?
• Who has been controlling it? people?
• Who has been benefiting from it? people?
• Who benefits from changes to it? people?

Who is people? My guess is that people is a mixed bunch and many of them aren't, and some never have been members of the Barclays pension schemes in question. There will be winners and losers, that's always a good bet!

mania112

pensionsnewbie wrote: »

'Transfer values are calculated using actuarial factors and assumptions determined by the schemes governing documentation and legislation. Those factors are changing from October 1st.'

CPI is run on a september-to-september year, so maybe the only change they're referring to is a change in CPI rate.

bigadaj wrote: »

As db pensions then they should only guarantee a level of income for those in the scheme, the fact that the Cetvs are very high shows a problem with the calculations.

Not necessarily, it could be intentional. I have seen CETVs uplifted to encourage a transfer.

pensionsnewbie

Just thought I would let people know it did go up by £50k - don't know why but not complaining - it was about this time last year I requested a CETV and in that period it has gone up by over £150k.