CETV query

shortseller09

Hi, not sure if anyone will be able to answer this but I requested a CETV in early 2017 and then again earlier this year. My queries are:
1. The values are almost identical yet gilt yields are significantly lower, inflation expectations are not hugely different, and I am two years older. I understand many factors are taken into account, but the main ones I noted favour an increase in value, particularly as the scheme is well funded.
2. Drilling down, the GMP transfer value has increased by £40k from £80k to £120k. I realise equalisation has had an effect, but 50%?
3. The other rights have decreased by £40k from £520k to £480k, can any one shed any light on what could cause a decrease given the gilt yield etc?

I have contacted the scheme several times but am still awaiting specific answers.
Many thanks.

232607

The fact you’re 2 years older would not necessarily favour an increase. The scheme may have altered the investment risk allocation it attributes to the fund and this may have altered transfer values.

It’s not as simple as looking a gilt figures. There’s lots of other things that could come in to play.
I’ve seen transfer figures swing by large amounts over a 3 month period when old ones ran out of date.
CETV’s are still around historical highs so logic says there’s more risk to them lowering than rising although no one knows.

Ultimately if you’re happy with what is being offered take it, if not don’t.
But don’t think what’s being offered will still be on the table in another 2 years time because that is a dangerous game to play.

FatherAbraham

shortseller09 wrote: »

Hi, not sure if anyone will be able to answer this but I requested a CETV in early 2017 and then again earlier this year. My queries are:
1. The values are almost identical yet gilt yields are significantly lower, inflation expectations are not hugely different, and I am two years older. I understand many factors are taken into account, but the main ones I noted favour an increase in value, particularly as the scheme is well funded.
2. Drilling down, the GMP transfer value has increased by £40k from £80k to £120k. I realise equalisation has had an effect, but 50%?
3. The other rights have decreased by £40k from £520k to £480k, can any one shed any light on what could cause a decrease given the gilt yield etc?

I have contacted the scheme several times but am still awaiting specific answers.
Many thanks.

Why would the scheme's level of funding affect a transfer value?

A liability (to provide you will an income, deferred, for the rest of your natural life, according to the scheme rules) can be valued - whether the fund actually contains enough resources to cover all its liabilities doesn't affect the value of those liabilities.

ffacoffipawb

FatherAbraham wrote: »

Why would the scheme's level of funding affect a transfer value?

A liability (to provide you will an income, deferred, for the rest of your natural life, according to the scheme rules) can be valued - whether the fund actually contains enough resources to cover all its liabilities doesn't affect the value of those liabilities.

A scheme will reduce transfer values to protect its solvency if it is in deficit. However any CETV quote should state that the transfer values have been reduced, though I don't know if the reduction needs to be specified. A transfer value is only an option and the member is under no obligation to take it.

A bit like an MVA from a with profits fund to protect the benefits of the remaining members.

shortseller09

Thank you for your views.