CETV - CRASH in VALUE

ischofie1

I had a work colleague who had his CETV rise by 25% over a 3 month period so 32% over 12 months is easily do'able.
What if you go back next year & find its dropped another 32%.
The key is to take the CETV when you're happy with what's being offered not trying to guess where they'll be in 1 years time.

No point in deliberating about what was on offer 12 months ago. That's been & gone.

blisteringblue

ischofie1 wrote: »

The key is to take the CETV when you're happy with what's being offered not trying to guess where they'll be in 1 years time.

No point in deliberating about what was on offer 12 months ago. That's been & gone.

Absolutely spot on, I sat down with my IFA and he asked me what I wanted from my pensions, we went through plans and lifestyle and what I wanted before we looked at any of the numbers.

I am likely going to transfer 2 of my 3 DB pensions, the 3rd just wasn't good enough.

I have colleagues at work who get theirs every year, this was the first time I looked at mine and the numbers allow me to do exactly what I want, when I want.

ianthy

ischofie1 wrote: »

The key is to take the CETV when you're happy with what's being offered not trying to guess where they'll be in 1 years time.

No point in deliberating about what was on offer 12 months ago. That's been & gone.

I think you are right. My CETV value has risen from £750k - £938k in 18 months and it continues to rise. I am at the point where I have plans for the cash lump sum and investing the pension. plus I am happy with the CETV sum. I can't spend the next x months second guessing the changes in CETV. Especially with the Conservative manifesto referencing pensions with increased powers for the Pensions Ombudsman, a lot could change regarding how companies handle DB pensions.

sandsy

agarnett wrote: »

Revenge might not, but subjectivity comes into it all the time, Linton.

Of course subjectivity comes into it. Nobody knows what investment returns are going to be for the next few years, or what gilt yields will be at a specific time when a person retires, or what inflationary increases will be needed, or how long someone will live. It's all based on an educated guess from what current economic and demographic data tells us. And that educated guess results in in a value which is representative of the amount needed at a specific point in time by the scheme to pay out the benefits due if those guesses were born out in practice (which they won't be).

As the economic data changes, so a different set of assumptions resulting in a different value emerging if the calculation is undertaken at a different point in time.

So it's the nature of the beast that it's subjective.

agarnett

sandsy wrote: »

Of course subjectivity comes into it. Nobody knows what investment returns are going to be for the next few years, or what gilt yields will be at a specific time when a person retires, or what inflationary increases will be needed, or how long someone will live. It's all based on an educated guess from what current economic and demographic data tells us. And that educated guess results in in a value which is representative of the amount needed at a specific point in time by the scheme to pay out the benefits due if those guesses were born out in practice (which they won't be).

As the economic data changes, so a different set of assumptions resulting in a different value emerging if the calculation is undertaken at a different point in time.

So it's the nature of the beast that it's subjective.

Yes, but it is also the nature of the beast in many cases that the sponsoring employer company realises that there is far more capital tied up in its DB staff pensions scheme than there is accessible capital for their declared business, and so that it is the pension scheme business which has become core. Their declared business is almost incidental. Look how many takeover propositions have floundered when the true scale of DB pension scheme liabilities has emerged. Look at that shining example of department store prowess, BHS. I used to quite enjoy shopping there assisted by the experienced happy staff!

I once memorably read a comment about an air traffic control company with major contracts at airports in UK, Europe and around the world. It was said that the company was in effect a multi billion pound Pension Scheme Administrator that just happened to run an air traffic control service as a sideline!

So which do you think they are tempted to tweak the most in their heavily loaded ships to steer them to where they want them to go? They turn the taps on and off on CETVs because they know they can and that the little people will point to the well worn excuse of ups and downs of gilt yields. It ain't as simple as that by a long way - especially if Goldman Sachs consultants have had their foots in the door and sold their brands of "de-risking" to trustees/employer.

But be alert. Shifting CETVs, unusually up, or unusually down are a barometer of the financial health of the sponsoring employer and it is very difficult to read.

LHW99

Given the OP's post No.5, is it likely that ill-health retirement may be an option (should the test results show a problem (hope not tho'))?