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CETV’s

edited 30 November -1 at 1:00AM in Auto-enrolment
2 replies 3K views
NenacherryNenacherry Forumite
1 posts
edited 30 November -1 at 1:00AM in Auto-enrolment
Hi

Can someone tell me why a CETV from the same pension provider changes in value on different dates

Thanks

Replies

  • AlanP_2AlanP_2 Forumite
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    Part of the Furniture 1,000 Posts
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    You would be better to post this in the main pension forum as this area is specifically to discuss Auto Enrolment and is not very busy.

    CETV values are based on Actuary's estimates of ho much would need to be invested to provide £x of annual pension benefit.

    Complicated calculations that encompass person's age, demographic profile of the scheme members, inflation expectations, current scheme funding and Gilt / Gov Bond / Interest Rate expectations etc.

    As and when these get reassessed then the CETV will change. One of the biggest drivers over last few years has been Gilt / Gov Bond / Interest Rates.

    If Gilts are paying say 5% then £100,000 needs to be invested to provide £5k of pension. When they are paying <1% as at present then you need a £500k investment to generate the same pension income.

    That is over simplified but hopefully gives you the idea.

    BTW - CETV values go DOWN as well as UP.
  • SonOfSonOf Forumite
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    Nenacherry wrote: »
    Hi

    Can someone tell me why a CETV from the same pension provider changes in value on different dates

    Thanks

    The pension section would be a better place to post. This section is auto-enrolment and is a ghost town and hardly anyone visits it. However.....

    You say pension provider. So, this would indicate that it is a "pension provider" rather than a defined benefit pension scheme. Although the phrase CETV is normally more associated with occupational pensions rather than personal pensions (where it is usually just referred to as TV - Transfer value).

    With defined contribution schemes, the money is invested and the values of investments changes daily. Hence why the transfer value changes daily.
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