DB transfer

ffacoffipawb

Thrugelmir said:

How many years until you draw your pension? If the figure is say £6,500 compound it by 2.5% annually to gauge what sort of figure it could be by then, 

The current pension, reduced for any theoretical early retirement factor, so basically the pension you would get "now" is the best value to compare with any CETV calculated "now". No point projecting it to NRD unless you do the same to the CETV as you would be comparing apples and oranges.

Thrugelmir

ffacoffipawb said:

Thrugelmir said:

How many years until you draw your pension? If the figure is say £6,500 compound it by 2.5% annually to gauge what sort of figure it could be by then, 

The current pension, reduced for any theoretical early retirement factor, so basically the pension you would get "now" is the best value to compare with any CETV calculated "now". No point projecting it to NRD unless you do the same to the CETV as you would be comparing apples and oranges.

Only as rough and ready guide. The increases in pension are guaranteed. With the BOE mandated to target CPI at 2%. RPI will always remain higher. With the CETV the future direction of interest rates is key. Though gilt yields cannot realistically drop much lower than they already are. If it's an increase in CETV that you are expecting to see. 

Albermarle

The current pension, reduced for any theoretical early retirement factor, so basically the pension you would get "now" is the best value to compare with any CETV calculated "now". No point projecting it to NRD unless you do the same to the CETV as you would be comparing apples and oranges.

In fact there are three pension figures you can compare a CETV against:

Let's say for example someone at 60 with a NRA of 65 

1) The pension that would be paid if retired at 60 ( so with five years commutation reduction )

2) The pension that would be paid at 65 at todays prices 

3) The pension that could be estimated at 65 including 5 years inflation.

Personally I would look at 2) but I am not sure what actuarial expert might say .

ffacoffipawb

Albermarle said:

The current pension, reduced for any theoretical early retirement factor, so basically the pension you would get "now" is the best value to compare with any CETV calculated "now". No point projecting it to NRD unless you do the same to the CETV as you would be comparing apples and oranges.

In fact there are three pension figures you can compare a CETV against:

Let's say for example someone at 60 with a NRA of 65 

1) The pension that would be paid if retired at 60 ( so with five years commutation reduction )

2) The pension that would be paid at 65 at todays prices 

3) The pension that could be estimated at 65 including 5 years inflation.

Personally I would look at 2) but I am not sure what actuarial expert might say .

You need to compare the two items at the same point in time, otherwise you need to allow for the time value of money as a further variable in your comparison.

A CETV of £100,000 can be compared with ...

(1) An immediate pension of £3,000 - an amount you can get now
(2) A pension of £4,000 payable from an NRD some time in the future, say 2029
(3) A pension of £1,000 when I left service in, say, 1992.

I can only see (1) as a logical like-for-like comparator.

Other opinions are available. 😀