BT Pension - Increased Transfer Values

Mick70

the 28 times figure - ive been quoted £1.47m against a £25.5k per annum DB (+76k lump sum) so there are some big valuations out there !!
However im assuming your DB would rise with inflation each year , if you use a speeadsheet , key in the DB pension amount into year 1 and increase it with inflation over 30 years (age 50-80) and see what comes back to, mine came to £1.2m doing that which considering it gives guaranteed income then you can see why these valuations are so big

Madeinireland

Interesting Mick...

I’ve just been offered about 1.25m (off the top of my head as not got documents in front of me).

That’s for a £32,900 Pension and a lump sum of about £98k and also includes my AVC’s which amount to around £225k

I wonder why your offer is better? I’m 58 - not sure if that’s making the difference. I’m also in Section B.

Thanks...

hyubh

Johnnyboy11 wrote: »

I think the point was relevant, since any transfer value must take account of the likely future value of the GBP, which has lost about 36% of its value since the 2008 crash.

Well if conspiracy-mongering floats your boat, I'm not looking to sink it. The current pension scheme for nurses is great, and I dare say it takes someone in a quasi-public sector scheme like DK68's BT one to think the pensions arrangements of nurses is somehow less than excellent.

DK68

look at the number of Nurses and NHS people needing to leave the admitedly good Pension Scheme ..
Due to increases in Contributions from April reducing take home pay squeezed by Inflation for 9 years. ...



which now leads me to answering the original Post (your welcome !)




Liz Truss and HMT put the Transfer Values Up , a consequence of reducing the Discount rate in Public Sector Schemes to 2.4% , so that 5 million Public sector workers and Employers paid Higher Contributions.
This gave them all Higher Transfer Values , when only a few of those Schemes are Funded , the majority Hypothacated (i dont know if you can transfer out of them but maybe that was the Intention ??). :T



https://hansard.parliament.uk/commons/2018-09-06/debates/18090633000015/PublicServicePensionSchemesQuadrennialValuations

JoeCrystal

DK68 wrote: »

(i dont know if you can transfer out of them but maybe that was the Intention ??). :T

You generally cannot transfer out of Unfunded public sector pension schemes and a jolly good thing too.

hyubh

DK68 wrote: »

Liz Truss and HMT put the Transfer Values Up , a consequence of reducing the Discount rate in Public Sector Schemes to 2.4% , so that 5 million Public sector workers and Employers paid Higher Contributions.

Liz Truss hasn't made any policy changes here - the last ones were in 2010. Unfunded public sector schemes like the NHS one are costed for against expectations of GPD growth. Roughly, the idea is, the greater future GPD growth, the greater tax revenues will be in the future (relative to today) and therefore the easier future governments will find keeping pension promises determined by salary levels in the present. Conversely, when expectations of GPD growth are revised downwards, then the cost of future pension payments in today's terms goes up.

The recent revisions to *employer* (not employee) contribution rates directly related to the second scenario.

This gave them all Higher Transfer Values , when only a few of those Schemes are Funded , the majority Hypothacated (i dont know if you can transfer out of them but maybe that was the Intention ??).

The opposite - attached to 'Freedom and Choice' in 2015 was a new ban on transferring out of unfunded public sector schemes to a DC arrangement, which override the otherwise statutory right to the contrary. This was purely for cashflow reasons (there is no reserve of money or investments to pay for a sharp increase in CETVs).

Mick70

Madeinireland wrote: »

Interesting Mick...

I’ve just been offered about 1.25m (off the top of my head as not got documents in front of me).

That’s for a £32,900 Pension and a lump sum of about £98k and also includes my AVC’s which amount to around £225k

I wonder why your offer is better? I’m 58 - not sure if that’s making the difference. I’m also in Section B.

Thanks...

unsure , maybe due to my age ? age 49 . DB pension would trigger at 50, whereas if go DC route be 55.
As say though once you set up an easy spreadsheet and use £25.5k DB pension rising with inflation say 2% per year, that DB pot comes out about £1.2m (age 50-80 assume), so not as huge a difference from the DC value as first thought which also has LTA tax issues

Johnnyboy11

hyubh wrote: »

Well if conspiracy-mongering floats your boat, I'm not looking to sink it. The current pension scheme for nurses is great, and I dare say it takes someone in a quasi-public sector scheme like DK68's BT one to think the pensions arrangements of nurses is somehow less than excellent.

The devaluation of Sterling is not a conspiracy, it's a fact. GBP:USD was 2.0 in 2008, today 1.27 (That's where my 36% figure came from). Similar picture for the GBP:EUR, 1.5 in 2007, today 1.13 (a 33% drop).

In addition to the above, nurses' pay and their pensions will have lost a further 15% in real terms since the crash, since public sector pay increases have been constrained at about 1% p.a and UK inflation has typically been more than double that.

hyubh

Johnnyboy11 wrote: »

The devaluation of Sterling is not a conspiracy, it's a fact. GBP:USD was 2.0 in 2008, today 1.27 (That's where my 36% figure came from). Similar picture for the GBP:EUR, 1.5 in 2007, today 1.13 (a 33% drop).

The value of the £ relative to the € or the $ has very little baring on either BT or NHS pensions.

In addition to the above, nurses' pay and their pensions will have lost a further 15% in real terms since the crash, since public sector pay increases have been constrained at about 1% p.a and UK inflation has typically been more than double that.

The value of their pension has gone up; the 2015 reforms barely dented this because the government caved into the unions.

That said, if your claim is that the salary/pension ratio is distorted, I'd agree with that.

DK68

You cannot get more on topic around money when its Pensions , Pension Attacks, Pension Values , Inflation understanding and the Exploitation of it with 2 metrics.


Its pure Money ... Let not those, exposed by numbers throw the Teddy Out ...



In this case BTPS B Members have more respectable values (25 times) now , with £4billion of Deficit Appearing. It is ok for that vlaue not to exist and the Deficit to be suppressed ?


C Members have RPI in their Values and that is under attack . by those that manipulate and exploit CPI inflation. The next trick is CPIH , first metric on the ONS inflation site.



Only the Publics awareness of Detail will see them respond in the right way.


When a key option to avoid loss of Employment is correct CETV values, then this is what MSE surely is for. Transfer Out stops loss of Employment conditions upon BTPS Pension Access for age 55 and Over , so all options to defeat such practices should be known.


How about such conditions being made illegal in Closed Schemes ?