Post 97 section 9 (2b) rights & Fixed Rate Revaluation

philng

Wife age 57 requested a transfer value from her pension around 6 months ago and 1 part showed the following:

Total Transfer Value £59650 (although the fund value was lass than £40k)
Value of Post 97 section 9(2b) rights £51318
Revaluation Basis: Fixed Rate
Reference Scheme Test Pension £1533

I have written to pension company to ask for an explanation but received no response.

I believe the transfer value has been topped up (quite significantly) to meet min pension requirement.

Where it states Fixed Rate Revaluation what is this applied to? Is it the post 97 rights? or transfer value? and what rate is it? Wondering whether this would mean better to defer any request to transfer to a SIPP to take advantage of guranteed future years revaluation?

xylophone

Previously discussed here

https://forums.moneysavingexpert.com/discussion/comment/71131480#Comment_71131480

If your wife does not understand the information she has been given, she should write to the administrator (send the letter signed for) requesting an explanation within a fixed time period - if one is not forthcoming, she might approach TPAS for guidance.

In the meantime, a PM to PensionTech might be worth a try - he is very knowledgeable on this matter.

http://forums.moneysavingexpert.com/member.php?u=2275126

philng

The following has now been confirmed by the administrator:

Transfer Value as at 8/8/16 was £59650

Reference Scheme Test Pension £1533 pa of which £870 pa pre 2009 and indexed linked to max 5% pa & £663 pa post 2009 indexed link to max 2.5% pa.

Normal Retirement Date is 31/7/19.

So I am assuming the £59650 transfer value is based on the indexed linked RST Pension-If so is this likely to increase or reduce the closer to July 2019 or after?

Just trying to work out any benefit in transferring now or delaying?

PensionTech

In the meantime, a PM to PensionTech might be worth a try - he is very knowledgeable on this matter.

Sorry for not seeing this before. I'm flattered although it's an abrupt way of finding out about my sex change

If so is this likely to increase or reduce the closer to July 2019 or after?

Crystal ball job.

Future revaluation is forecast to get an estimate of the pension payable at retirement age. For index-linked revaluation, that's based on an assumption about future inflation. The pension at retirement age is used to work out a capital value of the benefits at that point (using discounted estimates of all future pension payments), and then the whole thing is discounted back to the date of the calculation according to the "pre-retirement discount rate", i.e. the return that the scheme expects to achieve on its assets in the period between transfer quote date and retirement.

So all else being equal, the transfer value should increase as you get closer to the retirement date.

However, all else isn't equal - not at all. Actual future inflation can, and almost certainly will, be different to assumed future inflation. If actual future inflation is lower than assumed future inflation, this will push the transfer value down. Assumed future inflation (which is relevant for pension increases as well) will also change, as it's based on market expectations of inflation, which react to external circumstances (e.g. market expectations of inflation have recently gone up, in no small part due to Brexit). The discount rate is based on the expected yield on assets, which can go up and down, and is often linked to some other market metric e.g. a margin above low-risk yields like gilts, which have plummeted recently following more rounds of quantitative easing. So there are all sorts of factors that could cause the transfer value to go up and down, and you're unlikely to be able to "game" it. Furthermore - if you're set on taking a transfer (which may not be a good idea in the first place) you would need to consider potential investment return in the DC pension that could be achieved if you took the transfer earlier rather than later - the transfer value might go up if you wait to transfer, but it might go up more if you transfer now and invest it appropriately.

Transfer values fluctuate really, really widely. Although you can sometimes identify when conditions are or are not in your favour to transfer, it's pretty much impossible to look into the future and decide you'll be better off transferring in x number of years.

From what you've written here - I'm not trying to be unkind and I appreciate I'm extrapolating this from very little so I'm happy to be told I'm wrong - it seems you might not fully understand the benefits on offer or the nuances of transferring, and you might benefit from doing some research into DB to DC transfers in the first place before worrying about whether the transfer value is going to go up or down.

xylophone

I'm flattered although it's an abrupt way of finding out about my sex change

Sorry, ma'am!:)

I usually stick to the convention of using the masculine when "sex unknown"!

xylophone

Value of Post 97 section 9(2b) rights £51318

It still seems to me that you need to check whether the advice of a Pension Transfer specialist would be required.