Suddenly finding CETV Multiplier Tempting

Dazza1902

Just reading another thread "Am I mad" and the people are agonising, crunching numbers and debating investment returns and how long they will live for  and the size of the pot required.
 Why would you give up a DB pension to worry your way through retirement ? I guess if your existing provisions are substantial one could take the risk.

MallyGirl

I am considering it as the multiplier is high at 55 and the annual DB pension is only £2k pa which is a very small proportion of our 'number'.
Transfer value (when I last looked) was £111k so - even after paying for a transfer specialist - a 3.5% withdrawal would be a lot more than the DB payout. It is too small a number to add much in the way of smoothing.

jamesd

Dazza1902 said:

Just reading another thread "Am I mad" and the people are agonising, crunching numbers and debating investment returns and how long they will live for  and the size of the pot required.
 Why would you give up a DB pension to worry your way through retirement ? I guess if your existing provisions are substantial one could take the risk.

There's no need to worry about through retirement.

In this case even the most conservative safe withdrawal rate - that almost always sees you dying with more money than you started with - pays more than the work pension. Then once you reach state pension age you defer claiming for each partner for 6.4 years and you end up with the same guaranteed income as the work pension, but with uncapped inflation increases. Defer evenly and the spouse gets half of you die, defer unevenly to change that from nil to a hundred percent. And they also get a hundred percent of the remaining drawdown income.

Albermarle

MallyGirl said:

I am considering it as the multiplier is high at 55 and the annual DB pension is only £2k pa which is a very small proportion of our 'number'.
Transfer value (when I last looked) was £111k so - even after paying for a transfer specialist - a 3.5% withdrawal would be a lot more than the DB payout. It is too small a number to add much in the way of smoothing.

55 ! - is that a record on this forum ? Are you sure the £2Kpa is the latest figure and not out of date ?

Thrugelmir

Marcon said:

Thrugelmir said:

Marcon said:

Tony4625 said:

numptydumpty18 said:

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.

  What other factors determine a CETV value apart from age , proximity to be able to access funds ( at 55)  dependents age , annuity costs , considering other scheme members etc etc etc . The formula for working it out must be endless ?😯

The scheme's investment strategy. A CETV is based on the cost to the scheme in question, so a scheme which has a heavily defensive portfolio will assume a much lower rate of potential return (higher CETV) than one with a high proportion of growth assets (lower CETV).

Due to their nature. Pension scheme investments err on the side of prudence.  Growth is far too often bandied around without any context.  There's no certainty of higher returns if anything there's a greater risk of sizable losses in terms of holding individual stocks. 

I think you're confusing two things: the basis for calculating a CETV and what happens if the scheme's portfolio does not perform as well as hoped.

Not at all. To quote the pension regulator. 

"You are legally required to invest assets backing DB liabilities in a way that's appropriate to the nature, timing and duration of the expected future retirement benefits payable under your scheme. To help achieve this, many schemes hold 'matching assets' in order to manage investment risk relative to the liabilities". 

jamesd

MallyGirl said:

I am considering it as the multiplier is high at 55 and the annual DB pension is only £2k pa which is a very small proportion of our 'number'.
Transfer value (when I last looked) was £111k so - even after paying for a transfer specialist - a 3.5% withdrawal would be a lot more than the DB payout. It is too small a number to add much in the way of smoothing.

Not sure whether 55 is the multiplier or the pension access age but if it's the multiplier it becomes the new highest I've seen.

If you're not totally comfortable with drawdown don't forget that state pension deferral is an excellent deal to get back some guaranteed income.

numpty_dumpty

TVAS said:

You have not given me a reason why you want to transfer other than the CETV is high. It is high for a reason because that is the fund required to provide you with £7,100 at 60, plus escalation in payment plus a spouse pension of half or two thirds.

I am looking at it and thinking that at 3% drawdown its 9k from 55 rising with inflation rather than 7.1k from 60. And all going to spouse rather than 50%. Obviously with risk.

Health wise I have primary progressive MS and I want to have time to enjoy life whilst im still able. So also thinking I want to get the most out of it earlier rather than later. Im probably not ill enough to get the early retirement ill health benefits, although its a good point as I havent looked into it

MallyGirl

jamesd said:

MallyGirl said:

I am considering it as the multiplier is high at 55 and the annual DB pension is only £2k pa which is a very small proportion of our 'number'.
Transfer value (when I last looked) was £111k so - even after paying for a transfer specialist - a 3.5% withdrawal would be a lot more than the DB payout. It is too small a number to add much in the way of smoothing.

Not sure whether 55 is the multiplier or the pension access age but if it's the multiplier it becomes the new highest I've seen.

If you're not totally comfortable with drawdown don't forget that state pension deferral is an excellent deal to get back some guaranteed income.

It is not a CETV I have to request - there is an online portal.
The FS element increases a little over time due to the mandated increases - I left the company in 1993 and was only in the scheme for a couple of years as I was under 25 for most of my time there. The transfer out value has gone up quite a lot - it used to be in the high 70s and then 90s and now it is over £111k. Pension is £2,004 pa at 60 with an additional £164 pa till I turn 65. Pension scheme has a massive shortfall that the company is trying to address.
Maybe I have misunderstood it.

ErinGoBrath

MallyGirl said:

jamesd said:

MallyGirl said:

I am considering it as the multiplier is high at 55 and the annual DB pension is only £2k pa which is a very small proportion of our 'number'.
Transfer value (when I last looked) was £111k so - even after paying for a transfer specialist - a 3.5% withdrawal would be a lot more than the DB payout. It is too small a number to add much in the way of smoothing.

Not sure whether 55 is the multiplier or the pension access age but if it's the multiplier it becomes the new highest I've seen.

If you're not totally comfortable with drawdown don't forget that state pension deferral is an excellent deal to get back some guaranteed income.

It is not a CETV I have to request - there is an online portal.
The FS element increases a little over time due to the mandated increases - I left the company in 1993 and was only in the scheme for a couple of years as I was under 25 for most of my time there. The transfer out value has gone up quite a lot - it used to be in the high 70s and then 90s and now it is over £111k. Pension is £2,004 pa at 60 with an additional £164 pa till I turn 65. Pension scheme has a massive shortfall that the company is trying to address.
Maybe I have misunderstood it.

If it has GMP then that bit will be increasing at 7% pa all the way to your GMP SPA age of 60. Quite an increase over the years, which may explain the apparently high CETV.

What were the benefits split between GMP and non-GMP?