What's your (CETV) Number (Multiple)

Albermarle

My view would be to calculate the multiple on the expected pension at NRA . The reason is that if you take the CETV earlier then it has more years to last . Possibly a more conservative way of viewing it, but a valid one . In any case the multiple is just a convenient comparison and has no particular validity .
I refused one of X 33 based on NRA ( 65) about two years ago, when I was 59 ,+ free advice paid for by the ex employer . Based on 
1) The usual nervousness about giving up guaranteed income
2) Good terms for the DB pension ( RPI to max 5% - 66% spouse ) 
3) Subsequent employer pensions have been DC + high contributions from me . So already have plenty linked to the markets, so the balance between having both DB & DC is a nice one .
4) Possible LTA issues could be reduced by keeping the DB .
The only thing that niggles is that I have effectively lost about £50K in the lump sum payable , which is I guess part of the price for keeping a guaranteed income. 

michaels

Problem is the higher the multiple on offer = the greater the cost of generating an equivalent gauranteed income so at the end of the day it remains a question of how much you value certainty rregardless of the current 'headline' transfer value.

mark55man

So this is all really helpful.  To be clear, I'm not grasping at straws for any reason to do this, indeed my natural reaction is to be cautious.  The question was raised as my CETV has increased by 60% in 4 years, and I was debating what multiple would be enough to make me click into investigating.  

I understand the basics of CETV calculation but am not a financial professional - in my spreadsheet I do the following:
* Take the DB benefit at the time I became a deferred member and multiply by existing factors to date, and predicted CPI to my scheme NRA -this gives the target DB income.
* Then take the CETV value given to me by the scheme (which is based on the money they would require to meet that obligation at that future date less netted back down to todays value using their predicted growth rate.

The two factors in the above which I can't know are the amount they require (or rather are required by the regulations and best practice) to give me £1 of income, and then the expected growth rates they use to reverse back the amount to today.

    

Stubod

Prior to COVID I was fairly certain I was going to take two of mine and keep two in pensions, (I have 4 in old deferred schemes). The one that I find quite bizzare is that I think I only contributed about £1,500 back in the day, and the CETV is currently worth north of £100k?

I thought that if I took two and kept 2 that was a good compromise, but I started to lose my appetite for that when COVID hit and I saw what happened to the markets. OK they have recovered, but I am more concerned about the longer term impacts and we have never had that much success with investments, only getting relatively small gains over the last few years, (accept this is down to the investments that have been chosen by our FA..)

TBC15

Mine was 34 I think 3 years ago when I did my transfer.

Albermarle

and predicted CPI to my scheme NRA -this gives the target DB income.

I do not think this is quite the right way of looking at it . You should use the pension figure at NRA in todays money and not add on a guess at future inflation .

Albermarle

The one that I find quite bizzare is that I think I only contributed about £1,500 back in the day, and the CETV is currently worth north of £100k?

I did not contribute anything at all to my DB pension . It was a private company and the pension was non contributory .So called Platinum plated .

It was in the Chemicals business and  the bosses were mainly ex ICI from the seventies and so managed to persuade the foreign owners that this was normal/industry practice.

Of course it eventually became contributory and then was stopped altogether after I left.

mark55man

Albermarle said:

and predicted CPI to my scheme NRA -this gives the target DB income.

I do not think this is quite the right way of looking at it . You should use the pension figure at NRA in todays money and not add on a guess at future inflation .

OK I'll have a look, I think you are right I am either double counting, zero counting or adding with one hand and taking away with the other.  About half the pension though is on a fixed 3% p.a increment come rain or shine, the other is CPI linked.  I think your point is still the way to look at it though.

PS I once went to Runcorn to see a small business and was gobsmacked when I landed at the old ICI plant which was now a modern business centre

Thrugelmir

mark55man said:

Albermarle said:

and predicted CPI to my scheme NRA -this gives the target DB income.

I do not think this is quite the right way of looking at it . You should use the pension figure at NRA in todays money and not add on a guess at future inflation .

PS I once went to Runcorn to see a small business and was gobsmacked when I landed at the old ICI plant which was now a modern business centre

I still chuckle when I recall the TV programme when Sir John Harvey-Jones went to Malvern and told the Morgan Motor Company how to modernise their factory. A real character. 

Albermarle

mark55man said:

Albermarle said:

and predicted CPI to my scheme NRA -this gives the target DB income.

I do not think this is quite the right way of looking at it . You should use the pension figure at NRA in todays money and not add on a guess at future inflation .

OK I'll have a look, I think you are right I am either double counting, zero counting or adding with one hand and taking away with the other.  About half the pension though is on a fixed 3% p.a increment come rain or shine, the other is CPI linked.  I think your point is still the way to look at it though.

PS I once went to Runcorn to see a small business and was gobsmacked when I landed at the old ICI plant which was now a modern business centre

Where you went was  actually what was the ICI technical/conferencemanagement  centre. The actual old plants are about half a mile a way . Many still working under different ownerships but apart from a few parts, showing their age badly.