Low DB CETV Quote

kilfinan

I recently received a CETV on a pension of £5332 per annum of approximately £95k. This seems incredibly low to me.

Should I wait a year and ask again or is there a risk it will go even lower?

I am determined to cash in as I have two other DB pensions that will easily cover our retirement and we want to free up cash for holidays and house improvements etc.

Also, what part does my ex employer play in the transfer value? Is the actuary entirely independent. Let's just say the company wasn't my favourite employer...Thanks for reading

Thrugelmir

kilfinan wrote: »

This seems incredibly low to me.

Why? Would £95k buy you an indexed pension of £5,332 for life. I suspect not. More likely nearer 60% of that sum.

kilfinan

I received a transfer multiple of nearly 44 for another DB pension. I also read that anything less than 25 is low.

AnotherJoe

I think 20 to 25 is the "norm" from what I've read anything above that is extraordinary, 44 certainly is. Yours at 17 or 18 to 1 is a tadge on the low side thats all. Government is 12 to 1. FWIW I could get 25 to 1, on my sole DB that i wont be trading in.


Its hard to disentangle employer from pension, since they employ the pension trustees who do the maths but if you are implying they've got it in for your specifically i very much doubt thats the case. The trustees are not there to hand out big wadges of cash to people leaving they need to make sure theres enough left for the employees they will continue to pay.

hugheskevi

Be aware that in August the Pension Regulator warned DB schemes about excessive transfer values - link here.

Government is 12 to 1.

That is the lump sum commutation rate, the CETV rate is different. The CETV depends on the member's age and sex.

For the post 2015 schemes in particular, CETV multipliers can be considerably lower than 12:1. Although as transfers to DC schemes are prohibited in the unfunded schemes, it is often a moot point.

Silvertabby

AnotherJoe wrote: »

I think 20 to 25 is the "norm" from what I've read anything above that is extraordinary, 44 certainly is. Yours at 17 or 18 to 1 is a tadge on the low side thats all. Government is 12 to 1. FWIW I could get 25 to 1, on my sole DB that i wont be trading in.


Its hard to disentangle employer from pension, since they employ the pension trustees who do the maths but if you are implying they've got it in for your specifically i very much doubt thats the case. The trustees are not there to hand out big wadges of cash to people leaving they need to make sure theres enough left for the employees they will continue to pay.

12:1 is the public sector commutation rate, not the transfer factor.

The transfer factor for the LGPS (AFAIK the only public sector pension fund that may be transferred to a DC scheme) is set by GAD - and can be less than x 20.

Albermarle

I was recently offered 31 times , but the conditions of the DB pension are better than normal . 70% for spouse pension in case of death. Also I understand that they tend to offer better CETV's to people with a relatively short time to retirement .

sandsy

What is the scheme retirement age and how old are you?
Is £5332 the amount at date of leaving the scheme, the value now or the projected value at normal retirement age?

All of those things affect the value of the transfer value. So without knowing those, we can't even begin to say anything about the transfer value relative to the benefits offered.

Muscle750

Its basically to make sure there is enough money in the pot to pay the people that stay in the scheme full term and not barrel out early.

DairyQueen

I received a much higher multiple when I transferred last year but the transfer landscape has changed since then. I was only two years from scheme retirement age plus the scheme was well-funded. It later became apparent that the company had business reasons for wanting to offload as much of its DB liability as possible. All of these factors contributed to my generous offer.

There will be sound reasons why you have been offered a low-ish multiple - it won't be personal.
It's the luck of the draw.

dunstonh

Should I wait a year and ask again or is there a risk it will go even lower?

You are a year past the peak point. It has been heading down since.

I am determined to cash in as I have two other DB pensions that will easily cover our retirement and we want to free up cash for holidays and house improvements etc.

You are willing to give up potentially half of that £95k value to cash it in? Even if you dont have any other earnings you are going to lose a quarter of it. If you do have other earnings, you could be closer to a half of it.