Transfer Value of defined pension

50Twuncle

How is the pension transfer value of a defined (final salary) pension calculated ?

Dox

It is intended to represent the value of the benefits being given up if you transfer out of the scheme. The calculation isn't a simple one and normally the trustees can, based on actuarial advice, vary the basis of calculation at any time and without notice to members. It will vary from month to month in accordance with market conditions.

You can ask your scheme to provide further details but it is unlikely you will get a particularly helpful response - most transfer value calculations require manual input from a specialist such as an actuary, or (for large schemes with a high volume of transfer requests) the calculation will have been coded (i.e. automated).

HappyHarry

50Twuncle wrote: »

How is the pension transfer value of a defined (final salary) pension calculated ?

Google is your friend here.

Effectively, the actuaries estimate how much money will be needed at retirement to provide a guaranteed lifetime income to the member.

The actuaries then discount that figure back to today's value using an estimate of growth over the intervening years, to produce a CETV.


Every scheme's actuaries will calculate slightly differently, as they use slightly different assumptions with regard to future growth rates, annuity rates and interest rates.

50Twuncle

Dox wrote: »

It is intended to represent the value of the benefits being given up if you transfer out of the scheme. The calculation isn't a simple one and normally the trustees can, based on actuarial advice, vary the basis of calculation at any time and without notice to members. It will vary from month to month in accordance with market conditions.

You can ask your scheme to provide further details but it is unlikely you will get a particularly helpful response - most transfer value calculations require manual input from a specialist such as an actuary, or (for large schemes with a high volume of transfer requests) the calculation will have been coded (i.e. automated).

I don't think that it is wise to even consider transferring a Civil Service Pension (or whether it is even possible) - but I was just wondering how they calculate the value ?
I am in receipt of the pension (and have been for 8 years) - I am now 54 years old - medically retired in 2010 !

Dox

You can't transfer a pension once it is in payment.

Brynsam

Dox wrote: »

You can't transfer a pension once it is in payment.

Nor can you transfer from an unfunded public sector pension (which the CSS is) to a defined contribution arrangement.

Silvertabby

As above. Even if it were possible, the transfer value wouldn't be a much as you might be thinking.

Have you been reading these boards and been drooling over transfer values of 40 x the annual pension? Well, forget that - CS transfer values (like the LGPS, which is possibly the only public sector pension that may still be transferred out) were set by GAD, and so were much less.

Another point to ponder is that as you were medically retired before 50/55, your CS pension would almost certainly have been enhanced on ill health grounds. Had you opted to transfer your benefits out then, the transfer value would have been based on your actual accrual and wouldn't have included the enhancement.