I have an old DB CETV Value of £80k

IAMIAM

That gives me around £5000 per annum aged 65. Does a CETV value go up between now and age 65. I am planning on using this between age 60-65 before another defined benefit pension kicks in at age 65, but want to understand if that 80k may increase to say 120k-150k by the time I am 60.

molerat

A CETV may go up, it may go down, it may stay the same.  It simply reflects what the pension provider consider at that point in time is the cost to them of that pension over its lifetime or more to the point the savings to the scheme by shedding that particular liability.

dunstonh

CETVs on DB pensions are not based on investment returns.  They are based on the the cost of covering the liability.

One of the major causes for DB CETVs going up as the reduction in interest rates impacting on gilt yields.   That cycle is going to end at some point (it may already have - but it may not - only hindsight will tell).     

2nd_time_buyer

... on the face of it that seems a pretty terrible CETV. Values of 30x annual pension are often bandied around. In that sense I would imagine it could only go in one direction.

Albermarle

2nd_time_buyer said:

... on the face of it that seems a pretty terrible CETV. Values of 30x annual pension are often bandied around. In that sense I would imagine it could only go in one direction.

£80K divided £5K = 16X , which as you say is abysmal . Even double that would be at best a 50:50 shout.
OP - If these figures are right then you want to forget about any kind of DB transfer as an option .

Thrugelmir

IAMIAM said:

That gives me around £5000 per annum aged 65.

If your DB pension is indexed link then the pension payable by then will be much higher. 

The CETV will be influenced by high old you are currently. 

IAMIAM

Great. Thanks for that. It is indexed linked at RPI capped at 5% - does this mean the projected 5k will be increased between now and when I draw it or from when I draw it to when I die. 

2nd_time_buyer

IAMIAM said:

Great. Thanks for that. It is indexed linked at RPI capped at 5% - does this mean the projected 5k will be increased between now and when I draw it or from when I draw it to when I die. 

It will increase from now till you die (or when your partner dies if there are partner/spouse benefits)

Dazza1902

How old are you ?

Marcon

dunstonh said:

CETVs on DB pensions are not based on investment returns.  They are based on the the cost of covering the liability.

True, but the scheme's investment strategy impacts on the CETV offered because transfer values are based on the actuary's beset estimate of the cost to the scheme in question of providing the benefit. If the scheme has a large percentage of its investments in growth assets, the CETV will assume a higher rate of return (which leads to a lower CETV) than if the strategy is heavily defensive.

IAMIAM

34, so another 30 years to go