USS Transfer Value?

kidmugsy

rathernot wrote: »

£160-200K seems a massive sum assuming that's basically as good as "cash" into a SIPP or similar.

What you have actually learnt is how horribly expensive it is to supply final salary pensions.

Of course the £200k might not be as good as cash because when you invest it you might lose a lot of it. If you don't invest it it will be worse than everyday cash because you will find it near-impossible to get a decent interest rate on it.

Unless you are in lousy health, or have no prospective widow, a final salary pension is a valuable item. Presumably the pension will be CPI-linked with no cap? Very valuable item.

rathernot

Some more good food for thought thank you

So as someone who has paid zero attention to pensions other than paying in, if I assume that the £8K/year at 65 figure is accurate (it must be, surely?) then maybe 20 years from retirement plus a lump sum and I guess I can understand where those £200K (ish) online CETV estimates come from.

Where I'm struggling is that if I did a transfer and get 200K cash now to invest in a SIPP surely I've got what I'd be getting at 65 now and I have the opportunity to grow it more, just as the I have the opportunity to do badly with it?

NoMore

But your 8k per year is presumably index linked, so you would have to outgrow that. Plus as its linked to your salary, it would increase in line with that, any promotions etc. Getting it now would negate all that.

rathernot

NoMore wrote: »

But your 8k per year is presumably index linked, so you would have to outgrow that. Plus as its linked to your salary, it would increase in line with that, any promotions etc. Getting it now would negate all that.

I'm not in the scheme any more as I no longer work there so I assume any relevance to salary ended when I left the scheme a few years ago.

The £8K/year is the projection from the USS DB modeller/calculator of benefits aged 65 based on the last statement I had.

I'm not sure I said in my original post but I'm around 20 years from retirement if that's relevant.

Martinb

I asked USS for a CETV. They made an error and undervalued it by nearly 100k. The error was caused by them understating my annual gross pension.
Readers should note that undervaluing a CETV is one way of ensuring that people don't take their money out of a scheme, though I'm not implying that this is the reason for the error.
When I pointed the error out I was told by USS, I paraphrase, that I am responsible for spotting inaccuracies in their communications, not them. So buyer beware.

hyubh

Martinb wrote: »

Readers should note that undervaluing a CETV is one way of ensuring that people don't take their money out of a scheme, though I'm not implying that this is the reason for the error.

Transfers out, from a scheme POV, are positive (if minor) derisking events. Would only be negative if a serious glut of the things caused a temporary cashflow problem.

Dox

Martinb wrote: »

Readers should note that undervaluing a CETV is one way of ensuring that people don't take their money out of a scheme, though I'm not implying that this is the reason for the error.

Trustees (or managers, in the case of certain funded public sector schemes) have to offer transfer values which provide 'fair value'. They can't, as you put it, 'undervalue' them to 'ensure people don't take money out of a scheme'. They can (after following quite a lengthy process) temporarily pay reduced transfer values where a scheme is seriously underfunded and the employer covenant is dodgy, but that's a wholly different issue - they have to declare to members that the transfer value is reduced.

Most schemes (or more accurately scheme sponsors) are delighted if members transfer out!