Another CETV Q; Help Me Thrash It Through...

Mutton_Geoff

Thrugelmir wrote: »

If had bought Fevertree stock when it listed on AIM in November 2014. A share would have cost you around 160p-170p. £10k would have bought you some 5,880 shares. At todays price of £24.93p your holding would be worth £146,500. That's good fortune. No correlation to gilt yields involved.

I bought £5k of Southern Cross early in 2011 as the share price had plummeted and I believed there was no way the government would allow the business to fail as it accomodated so many pensioners.

Six months later I had nothing when the company folded.

As they say, hindsight is a wonderful thing.

cloud_dog

Oh dear, have encountered a 'thing' in this thread which may scupper the idea to obtain a CETV and review the appropriateness or not of a transfer.

Basically you cannot be an active member of a DB scheme and obtain a CETV. To obtain the CETV you need to have left the scheme. So, pretty much like the poster on the referred to thread, I would have to leave the DB scheme and join my company's DC scheme.

Did a quick search on the interweb and found this from the pension advisory service:

*NOTE: You must have left your scheme and no longer be an active member for this to apply. If you are still an active member then the guaranteed transfer value will not apply.

NoMore

I think it just means the guarantee doesn't apply, not that you can't ask for a CETV

xylophone

Basically you cannot be an active member of a DB scheme and obtain a CETV

https://www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/DB_Options_Pension_Flex_SPOT024_V1.pdf

Every 12 months you have a right to request a transfer value quotation from the scheme. Your scheme may allow you more frequent requests, although you may be charged for this.

https://shropshire.gov.uk/committee-services/documents/s10719/6.%20Comms%20and%20Safeguarding%20Appendix%20A%20CETV%20Request.pdf


If you wish to request a Cash Equivalent Transfer Value (CETV) of your pension savings in the Local Government Pension Scheme (LGPS) and you are currently paying into the LGPS, we will work out an estimated CETV and send it to you when you have completed, signed and returned the CETV Request Form. We would normally do this within 3 months of receipt of the form.

If you are an ‘active member’ of the LGPS i.e. currently paying into the LGPS, we cannot pay a CETV of your LGPS benefits. If you no longer want to pay into the LGPS then you will need to opt out.

cloud_dog

Thanks for the replies / confirmations. We'll plod on and see what comes.

hyperhypo

hello, thought i'd give my summary of doing same procedure as OP, albeit in a deferred scheme. Request was put in this time last year.

I had 12 years in a db scheme . db pension of £12, 350 (as at 2012) when db scheme access stopped. RPI increases capped at 10% until retirement at 63. Spouse 50%.

CETV 2017 was £422,000.

I went through the initial stages of transfer calcs ..i didn't proceed for thefollowing reasons.

I had little external cash savings , although i'd made signficant savings in a SIPP since 2012 (£100k plus)

More signficantly,

I didn't understand the technical documents that compared the projected growth of my transferred DB money against various benchmarks ...there appeared to be a numeric advantage but it simply wasn't clear enough, and high growth assumptions were made.

Nowhere did it say this is a good idea, or appear to make any assessment of myh other assets , spouse etc. It was simply the data from Mercers that had been crunched through some specialist software ...it contained no personal analysis , simply a numerical comparison.

The way these numbers were presented simply put me off.

I did speak to a second IFA informally who suggested i'd be mad to do it, in so many words.

So i didn't. But colleagues who had more time in schemes with spouses with DB provisions and / or large cash buffers have done so and are watching their million pound pots rise and fall.

cloud_dog

Hi

Thanks for sharing your experience and thoughts.

I am not set on a course of action, as yet. I've got 'The Number', I've played with some spreadsheet calculations but it really depends on the CETV (or in my case the estimate, as I am still an active member).

I've done as much as I can to understand the ramifications of any decision but at the moment it is all hypothetical and it doesn't have the weight of finality until I have the ratio.

Thrugelmir

hyperhypo wrote: »

simply a numerical comparison.

That's the bottom line.

"The rule is, jam to-morrow and jam yesterday – but never jam to-day."

kidmugsy

bostonerimus wrote: »

But my employer offered a one time chance to buy into their DB pension and a lump sum of $280k would give a $20k index linked pension at 55.

Goodness me; do you know why? Why would a firm ... or was it a firm?

bostonerimus

kidmugsy wrote: »

Goodness me; do you know why? Why would a firm ... or was it a firm?

It was a US state government pension scheme. The scheme gives highly paid employees a choice between a DB plan and a DC plan. The contributions are exactly the same for both plans. After the 2007-2008 crash some powerful people and unions lobbied for a one time chance to change. It was ridiculous IMHO as the risks of the DC plan were clearly explained. It required state legislation and permission from the federal IRS tax authorities. I had more than enough in my DC plan, despite being in it only since 2004 and investing through the crash, to buy into the DB plan. So I ignored my philosophical problems with the whole thing and bought in as it was such a good deal and gave guaranteed income decoupled from the stock market. I still have the vast majority of my money in the stock market, but when the markets fall by +10% I'm happy I don't get my day to day income from drawdown.