Glaxo Smith Kline CETV halved in 12 months

Parking_Trouble

I have an old deferred DB pension with Smith Kline and French (now GSK). A year ago I asked for a CETV and was quoted £106k.

I asked again recently, having waited for another free quote rather than spend £150 for it.

It came back after a long wait as £51k


I know Trustees might change strategy and Gilts may recover but losing half seems rather extreme. There seems to be a whimsical calculation method although I'm sure the actuaries will explain how complex and volatile this can be.


Has the bubble burst? Is this a general trend?

Could it just be GSK want to hold onto their DB members now?

232607

On the face of it a 50% swing does seem excessive.
I have however seen valuations move by 25% over a 3 month period where I work so not entirely impossible.

I may be sceptical but like yourself I think other factors come in to play.
At our Co we were having a raft of people cashing out & retiring early.
Poor transfer values would obviously help stem this problem.

blisteringblue

Ouch, I couldn't think of a worse scenario of this if you had a good price last year and thought this year you would definitely take it only to find it is now impossible.

I only asked for CETV values last year for my 3 pensions, first time I had done so. 2 were enough and the other wasn't so I took the 2 and will be happily giving up work at 55. Never once thought I would hang on and just see what it was going to be next year? It's all about the now for me, was it enough to let me go at 55 and it was, so I took them.

Dox

232607 wrote: »

I may be sceptical but like yourself I think other factors come in to play.
At our Co we were having a raft of people cashing out & retiring early.
Poor transfer values would obviously help stem this problem.

Why do you think this is a problem? Transferring out is an excellent way of derisking, so the idea that schemes want to 'hold on' to DB members is way off the mark.

OP, have you asked the administrators to explain why the value has reduced so dramatically?

Parking_Trouble

This one was a bit of icing on the cake. I've started taking my main DB pension at NRD but still working.


Not been happy with Equiniti. Goalposts seems to have shift more than once. Pension calculation is definitely a dark art.

Parking_Trouble

Dox wrote: »

Why do you think this is a problem? Transferring out is an excellent way of derisking, so the idea that schemes want to 'hold on' to DB members is way off the mark.

OP, have you asked the administrators to explain why the value has reduced so dramatically?

No but I will definitely be asking.

The quote took ages. They sent me a letter saying it would take another 10-15 working days because it needed to be referred for an actuarial calculation.

No doubt the excuse will always be that the quotes may go up and down.

Thrugelmir

232607 wrote: »

I may be sceptical but like yourself I think other factors come in to play.
At our Co we were having a raft of people cashing out & retiring early.
Poor transfer values would obviously help stem this problem.

Likewise a potential rise in BOE base next month. Which will influence 10 year gilt rates.

Asghar

Thrugelmir wrote: »

Likewise a potential rise in BOE base next month. Which will influence 10 year gilt rates.

If the BOE did raise interest rates next month then any future transfer values would fall wouldn't they?

232607

Dox wrote: »

Why do you think this is a problem? Transferring out is an excellent way of derisking, so the idea that schemes want to 'hold on' to DB members is way off the mark.

OP, have you asked the administrators to explain why the value has reduced so dramatically?

It may be good for the pension but not always for the Co.
we have an ageing workforce in a very specialised sector.
When they shut the DB scheme you started to have people transfer out & finish early who otherwise wouldn't have done.
It did and still does have an adverse effect on our business.

Brynsam

232607 wrote: »

It may be good for the pension but not always for the Co.
we have an ageing workforce in a very specialised sector.
When they shut the DB scheme you started to have people transfer out & finish early who otherwise wouldn't have done.
It did and still does have an adverse effect on our business.

What's good for the pension is also good for the company, given they are the paymaster and on the hook for whatever it costs to fund the promised benefits. Members transferring out takes off a lot of financial pressure off the employer.

As you say, though, that's not the whole story. Shutting the DB scheme caused the problem in terms of inability to retain staff. However, your earlier suggestion that 'poor transfer values' would stem the problem doesn't apply - it is for trustees to set the transfer out basis after taking advice from the scheme actuary. It isn't a company decision.

ffacoffipawb

Asghar wrote: »

If the BOE did raise interest rates next month then any future transfer values would fall wouldn't they?

Depends on the yield curve impact. Could go either way really.