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Does a CETV value naturally increase..

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as you age if you were part of on old defined benefit scheme now closed to new members acrueing at RPI/max 5%....based on the fact it will cost more to get the equivalent guaranteed pension as we age if we transfer out....
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  • tacpot12
    tacpot12 Posts: 9,244 Forumite
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    edited 21 December 2020 at 5:40PM
    No. While the fact that you are accruing additional benefits will tend to increase the CETV, there are other factors in play such as the longevity of the existing members and the investment performance of the assets (or the ability of the trustees to purchase assets that match the pension liabilities).

    So while it is likely to increase year on year, it isn't guaranteed. 
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • IAMIAM
    IAMIAM Posts: 1,334 Forumite
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    I have a CETV of 90k with a guaranteed pension of £5k per annum at age 60. I am tempted to transfer out and SIPP it but want to leave it also, if the 90k becomes 120k etc in 10 years etc. I have 20-25 years left to take it. 
  • ussdave
    ussdave Posts: 372 Forumite
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    IAMIAM said:
    I have a CETV of 90k with a guaranteed pension of £5k per annum at age 60. I am tempted to transfer out and SIPP it but want to leave it also, if the 90k becomes 120k etc in 10 years etc. I have 20-25 years left to take it. 
    That isn't a deal I would take personally.  The multiple for the CETV seems quite low.  

    No harm in checking again in a few years to see if it has improved.  For reference, I had an old 1k/year DB (from 65) and was offered over 50k for that last year.  I was 38 at the time.  That was tempting and I may revisit it in the future.
  • IAMIAM
    IAMIAM Posts: 1,334 Forumite
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    Right, so if the 5k per annum in effect gives me a CETV of say 200k in 10 years plus then its worth considering...
  • Everyone has their price I guess. It would cost at least £5k for the advice to allow you to transfer out which needs to be factored in. £200k would sway many people but even then that would mean you would be giving up a guaranteed 2.5% return, largely index linked, which is attractive given current conditions. 
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    IAMIAM said:
    Right, so if the 5k per annum in effect gives me a CETV of say 200k in 10 years plus then its worth considering...
    In 10 years time the guaranteed benefits will be far higher than £5k.  Inflation will see to that. 
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    edited 21 December 2020 at 7:49PM
    No don't transfer out on that multiple, IAMIAM. 
    How old are you?
    EDIT: Sorry, see you are early thirties.
    No, leave it where it is for twenty years at least. Even if the guaranteed rises don't keep apace with the whole of the market, by the time you are 55, it can be a rock to support the riskier side of your fortune.
  • L9XSS
    L9XSS Posts: 438 Forumite
    Third Anniversary 100 Posts Mortgage-free Glee! Name Dropper
    No, mine has fluctuated in the last 3 years, however the most recent one was 55k higher than the previous year. Still not tempted to take it as the pension is 19k at 65.......
  • IAMIAM said:
    I have a CETV of 90k with a guaranteed pension of £5k per annum at age 60. I am tempted to transfer out and SIPP it but want to leave it also, if the 90k becomes 120k etc in 10 years etc. I have 20-25 years left to take it. 
    That’s defo very low and you shouldn’t even consider it tbh. I currently have a CETV of £325k with a guaranteed pension of £10k and I’m not considering it at this stage (20yrs left to take it). It has been as high as 35 time value and I made enquiries at that stage. To be honest, even though I felt I had very sound personal and financial rationales for transferring my pension I was really struggling to get someone to take it on. Eventually I did but it dropped to £300k within a month so I put it on ice. I have a further £330k in a DC pension and would prefer the flexibility and ability to manage the money myself. But will look into it again at some stage no doubt...
  • Marcon
    Marcon Posts: 14,380 Forumite
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    Lucys_Da said:
    IAMIAM said:
    I have a CETV of 90k with a guaranteed pension of £5k per annum at age 60. I am tempted to transfer out and SIPP it but want to leave it also, if the 90k becomes 120k etc in 10 years etc. I have 20-25 years left to take it. 
    To be honest, even though I felt I had very sound personal and financial rationales for transferring my pension I was really struggling to get someone to take it on. 
    Wrong strategy. If an adviser thinks you've already made your mind up (and saying you have 'very sound...rationales' will sound that way to their wary ears) you are almost automatically seen as an even greater risk. Best bet is simply to say you'd like them to investigate/advise on the possibility of a transfer. You can then explain your reasons once the process is underway.
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
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