CETV - Guaranteed or not?

Hubertcat

I am currently in the process of transferring out of a deferred DB pension and have found the information on this forum very helpful, so have not felt the need to post until now!

The whole process has been fairly drawn out (and not inexpensive!), but should have been close to conclusion, with a final meeting with my IFA booked to sign the paperwork in time for the 90 day deadline.

My FA has advised me that he has received an email today from the scheme's administrators (in response to a GMP query raised several weeks ago) stating that they made an error and have reduced the CETV by around £5,000.

This is less than 2% of the total and is unlikely to affect the recommendation, but is does mean I will have to get another TVAS, adding to my expense and causing further delay.

The original transfer pack states the transfer value is guaranteed for 90 days. My Financial Advisor, seems to think they will be within their rights to amend the figure, but I feel if they made an error, they should stand by their original value.

When is a guaranteed CETV not guaranteed?

Any advice would be much appreciated!

PensionTech

When is a guaranteed CETV not guaranteed?

When it is based on erroneous data.

The guarantee period for a CETV means it will not be updated within that period to reflect market changes. It allows you the time to get the necessary advice and make a decision without being recalculated to take account of e.g. a massive fall in gilt yields (think Brexit). Usually this means that the transfer value will not be recalculated at all within that guarantee period. However, sometimes new information will come to light (particularly in the case of GMP, where many schemes have ongoing projects to reconcile old GMP data with HMRC, and aren't necessarily at fault) and in those cases you are entitled only to your true benefits, or in this case, the transfer value of those benefits. It doesn't matter who made the mistake in the original data. Any complaints procedure, for instance, will aim to put you back in the position you would have been had a mistake not occurred; in this case, if a mistake hadn't occurred, the CETV would be lower by £5k in the first place, so that is the position you are now in. However, if you are required to get a new recommendation (and are you sure that's definitely the case? I must admit I haven't looked at the advice requirement recently) then it would be a good idea for the scheme to contribute towards the cost of that additional advice as an act of goodwill.

A footnote: Imagine the scheme found that your transfer value should actually have increased by £5k from the original quote. Would you still be sticking by the "but it's guaranteed" argument, or would you want them to pay what your benefits are actually worth?

Hubertcat

Thank you for your quick response.

Administration of the scheme changed hands last year and this is being given as the reason behind the "erroneous data", so I doubt I will get anyone to accept blame.

I'm fortunate that the amount involved is not greater and will probably have to grin and bear it.

The new CETV is guaranteed for another 90 days.

I can understand if the figure has been recalculated to the same point in time as the original, using the same rates, but do not know if this is the case.

Malthusian

Contrary to what Monopoly may have taught you, when there is a "bank error in your favour" the law says you have to hand back the £200.

There will probably be the words "errors and omissions excepted" somewhere in the small print, but even if there isn't, you aren't liable to give someone £5,000 because you made a fat-finger error and didn't write "e. & o. e." on it.

Hubertcat

Update - It appears that the underlying benefits have not changed and the reduction in CETV is purely down to changed gilt yields since the original calculation.

My IFA has argued that it is fundamentally unfair to reduce the value just because the GMP data was not available at the time.

Waiting on their response.