CETV Advice Please

2nd_time_buyer

Iwantmycetv said:

Iwantmycetv said:

2nd_time_buyer said:

Iwantmycetv said:

hyubh said:

Iwantmycetv said:

hyubh said:

Iwantmycetv said:

FYI, pension pot if remains in scheme is £60K, CETV is £161K .... I wanted to access the £40K lump sum and put the rest in drawdown.

I'm very confused at what the 60K is that you're using to evaluate the 161K. Can you elaborate...?

So the trustees have quoted a transfer value from the scheme as £161K .... if I don't transfer out it's £60K.

The transfer value is £100K higher.

What do you mean, if you don't transfer out, the transfer value from the scheme is 60K...? That doesn't make much sense. Do you mean, as 2nd_time_buyer has suggested, that the 60K is the LTA value? If so, that has nothing to do with the 'real' value of the pension (there is no connection between a pension's value for LTA purposes and what a sponsoring employer has to do to fund it).

Annual pension is around £2200 pa 
The £161K is very generous, hence I want to access it.

That's completely implausible (161000/2220 = 72.5). What is the revalued pension? And what are the increases once in payment...?

Increases are based on RPI.

Maybe I should explain it differently, if I leave the pension in situ the cash lump sum is £15K but if I transfer it's £40K.

The pension if I take now after the £15K lum sum is actually £2300 (just double checked it).

In which case, the only way I think the £161k CETV could be justified is if the pension will be payable a long time before normal retirement age (e.g. in your early 40s). With the RPI increases it could be worth a lot more than £2300 in the future.

I'm 56 years old with the scheme normal retirement age being 60.

The £161K is valid but my IFA won't recommend it ... doesn't make sense with it being such a high value.

sorry should be IFA won't recommend transfer out

In which case it might be worth getting a second opinion from another IFA. Probably getting abridged advice in the first instance to see if it the recommendation is likely to be positive. 

Iwantmycetv

2nd_time_buyer said:

Iwantmycetv said:

Iwantmycetv said:

2nd_time_buyer said:

Iwantmycetv said:

hyubh said:

Iwantmycetv said:

hyubh said:

Iwantmycetv said:

FYI, pension pot if remains in scheme is £60K, CETV is £161K .... I wanted to access the £40K lump sum and put the rest in drawdown.

I'm very confused at what the 60K is that you're using to evaluate the 161K. Can you elaborate...?

So the trustees have quoted a transfer value from the scheme as £161K .... if I don't transfer out it's £60K.

The transfer value is £100K higher.

What do you mean, if you don't transfer out, the transfer value from the scheme is 60K...? That doesn't make much sense. Do you mean, as 2nd_time_buyer has suggested, that the 60K is the LTA value? If so, that has nothing to do with the 'real' value of the pension (there is no connection between a pension's value for LTA purposes and what a sponsoring employer has to do to fund it).

Annual pension is around £2200 pa 
The £161K is very generous, hence I want to access it.

That's completely implausible (161000/2220 = 72.5). What is the revalued pension? And what are the increases once in payment...?

Increases are based on RPI.

Maybe I should explain it differently, if I leave the pension in situ the cash lump sum is £15K but if I transfer it's £40K.

The pension if I take now after the £15K lum sum is actually £2300 (just double checked it).

In which case, the only way I think the £161k CETV could be justified is if the pension will be payable a long time before normal retirement age (e.g. in your early 40s). With the RPI increases it could be worth a lot more than £2300 in the future.

I'm 56 years old with the scheme normal retirement age being 60.

The £161K is valid but my IFA won't recommend it ... doesn't make sense with it being such a high value.

sorry should be IFA won't recommend transfer out

In which case it might be worth getting a second opinion from another IFA. Probably getting abridged advice in the first instance to see if it the recommendation is likely to be positive. 

Thank you .... I will do.

2nd_time_buyer

... one thing I am still not clear. As I understand it the £161k was only given as a CETV valuation for the purpose of the divorce settlement. Have you had a CETV for transferring out? If not, then the £161k is not applicable and there is not much you can do about it.

Not meaning to cause trouble... but it would have been in your ex-partners interest to inflate the value of the pension prior to settlement - are you sure nothing fishy went on with valuation? As others have also said the £161k based on a £2.3k pension is scarcely believable.

Iwantmycetv

2nd_time_buyer said:

... one thing I am still not clear. As I understand it the £161k was only given as a CETV valuation for the purpose of the divorce settlement. Have you had a CETV for transferring out? If not, then the £161k is not applicable and there is not much you can do about it.

Not meaning to cause trouble... but it would have been in your ex-partners interest to inflate the value of the pension prior to settlement - are you sure nothing fishy went on with valuation? As others have also said the £161k based on a £2.3k pension is scarcely believable.

I have CETV stuck in my brain but the transfer value is also £161K. This was from my DB pension and nothing to do with my ex.

This is my frustration, his pension had already been transferred out of a DB scheme years ago and so the value is the value ... it was matched against my CETV and the difference overall wasn't massive so we didn't do a pension sharing order.

PinkPanda_3

Several posts seem to be inferring the transfer value is incorrect, but I have the exact same situation with transfer value 185k but pension around 2400 @ 60.
My provider only does quotes up to 18 months prior to retirement but my quote for 18 months time came back at approx 2200 I think the reduction factor was .93 so seems to tie in.

The other factor is gmp which I confess I do not really understand.  This seems to make up a lot of my transfer value, so OP might want to check that too as given the notes below it could make a significant difference

I was told gmp revalued at 60 might uplift pension to around 6.5k due to difference between increases already received at cpi and  7%, but there has been no mention of this from the provider in the retirement quote and at 2 x the pension sum seems rather optimistic. Also did not fit with the example given in the transfer quote so am not confident of this and will be taking further advice. 

Good luck with the advisor.  

hyubh

Iwantmycetv said:

I have CETV stuck in my brain but the transfer value is also £161K.

CETV = cash equivalent transfer value. Still curious on what the 60K is supposed to be...

Linton

hyubh said:

Iwantmycetv said:

I have CETV stuck in my brain but the transfer value is also £161K.

CETV = cash equivalent transfer value. Still curious on what the 60K is supposed to be...

Wasn’t it the LTA value as suggested a couple of pages back?

hyubh

PinkPanda_3 said:

Several posts seem to be inferring the transfer value is incorrect, but I have the exact same situation with transfer value 185k but pension around 2400 @ 60.

[snip]

I was told gmp revalued at 60 might uplift pension to around 6.5k due to difference between increases already received at cpi and  7%, but there has been no mention of this from the provider in the retirement quote and at 2 x the pension sum seems rather optimistic.

£2400 vs. £6500 is quite a big difference! And £185K for £6.5K pa seems much more plausible.

Sounds like you left quite a while ago and have a chunky GMP revaluing at 'fixed rate' to GMP age (GMP age is 60 for women; the applicable fixed rate for leavers between 93 and 97 is 7%). Where a pension is brought into payment before GMP age, it sounds like the scheme revalues the whole pension from leaving to retirement as one (hence the CPI reference), then there is a correction at GMP age to correctly split the revalued GMP from the revalued excess (hence the 'uplift' reference).

What would then happen however depends on the proportion of pre- to post-88 GMP (assuming the scheme doesn't give above statutory increases on GMP, which I wouldn't expect given fixed rate revaluation). The post-88 GMP would increase at CPI capped to 3% and the pre-88 wouldn't increase at all. Any increases on the 'excess' will down to scheme rules, given you're a pre-97 leaver.

hyubh

Linton said:

hyubh said:

Iwantmycetv said:

I have CETV stuck in my brain but the transfer value is also £161K.

CETV = cash equivalent transfer value. Still curious on what the 60K is supposed to be...

Wasn’t it the LTA value as suggested a couple of pages back?

Doh, yes. So not very relevant to assessing whether a CETV of £161K is a 'good' figure or not.

Iwantmycetv

PinkPanda_3 said:

Several posts seem to be inferring the transfer value is incorrect, but I have the exact same situation with transfer value 185k but pension around 2400 @ 60.
My provider only does quotes up to 18 months prior to retirement but my quote for 18 months time came back at approx 2200 I think the reduction factor was .93 so seems to tie in.

The other factor is gmp which I confess I do not really understand.  This seems to make up a lot of my transfer value, so OP might want to check that too as given the notes below it could make a significant difference

I was told gmp revalued at 60 might uplift pension to around 6.5k due to difference between increases already received at cpi and  7%, but there has been no mention of this from the provider in the retirement quote and at 2 x the pension sum seems rather optimistic. Also did not fit with the example given in the transfer quote so am not confident of this and will be taking further advice. 

Good luck with the advisor.  

Yay! Someone else with the same problem! At least you understand how frustrating it is.

Assume you haven't been able to transfer your pension out?