Suddenly finding CETV Multiplier Tempting

numptydumpty18

I have a deferred DB pension which pays out at 60. This years statement shows a CETV multiplier of 44, I have always been firmly in the camp of keeping the DB as the cornerstone of my pension but this has me thinking.

For context, im 52. DB is worth 7100 at 60, I intend retiring soon, partly due to ill health, and have about 600k in other pensions and an ISA as well as full state pension entitlement. Spouse has good DBs kicking in at 60 and 67 and will also have full SP, she will be continuing working part time till 60.

At what point does a CETV multiplier become worth considering?

Stubod

*44 seems really good, I would consider anything over around *34 to be worth considering? (...but I am not an expert on such matters).

Dazza1902

I have a fs pension of £5k at 60 , it's cetv was 40 times. As tempting as it is  I think I'll leave it be, I don't have anywhere near your DC pot.
Surely with the DC money you have the final salary money gives a good spread of pensions ?

numptydumpty18

Dazza1902 said:

Surely with the DC money you have the final salary money gives a good spread of pensions ?

Yes, this is what my head says, keeps a spread of income sources, but I cant help feel tempted.

Stubod said:

*44 seems really good, I would consider anything over around *34 to be worth considering? (...but I am not an expert on such matters).

Mine was 34 last year, so its the hefty increase thats piqued my interest.

quirkydeptless

I'm keeping my DB pension whatever the CETV as a hedge against longevity risk.

Who knows, in 30 years time I might be buying anti-aging pills in Boots and be glad of the permanent income

shortseller09

What is the date of the latest CETV?

Long-term gilt yields have doubled since January, as a consequence transfer values have fallen significantly since.

numptydumpty18

shortseller09 said:

What is the date of the latest CETV?

Long-term gilt yields have doubled since January, as a consequence transfer values have fallen significantly since.

Good point. I got the pension statement yesterday and hadnt looked at the dates. The CETV was October last year, so well out of date, that may make it easier for me to revert to type and keep the DB. Also shows the pension value as of March last year and not this year so its a year out of date as well, which seems odd for an up to date statement.

mark55man

I've been tempted as well.  There was a long thread on here about the value of annuities (noting their expense), but even so valuable precisely to counter the longevity risk but also the ease of management as we enter our dotage.  So DB would fall into a similar camp of logic, which together with state and partner entitlements can form a basis on which you can live happily ever after.  The most telling aspect was that with that solid guaranteed base, investors felt confident in being more aggressive with their DC pots which over the last few years has paid off well.  Certainly I have now stopped teasing myself with CETV and moved my DC pot into 80:10:10 (Equity, Gold, Bonds)

DB is insurance so buy it once, don't have a DB, and then position your DC as if it was all you had 

Steve182

Another factor to consider is your risk appetite and how you would invest it. 


Would you make it work for you and likely achieve meaningful long term growth, or just try to preserve it with no or minimal risk?


If your intention is the former, I might be inclined to transfer it, if the latter I would keep it as is.

Albermarle

For context, im 52. DB is worth 7100 at 60

Is this definitely an up to date figure ? and not the figure you were given when you left that company ?

I only ask as many posters make this mistake and do not realise that between when they left the employer, and today, that the pension will have almost certainly increased with inflation and in this case the multiplier looks less exciting.

Dazed_and_C0nfused

Albermarle said:

For context, im 52. DB is worth 7100 at 60

Is this definitely an up to date figure ? and not the figure you were given when you left that company ?

I only ask as many posters make this mistake and do not realise that between when they left the employer, and today, that the pension will have almost certainly increased with inflation and in this case the multiplier looks less exciting.

Good point. 

How can they know what it will be worth in 8 years? 

Or does it have a permanent fixed inflation increase?