Low? USS CETV offer

greyhound2022

Hello,
I'm a newbie to this forum but just wanted your opinons.
I'm 58, retired for a couple of years and was planning on taking my DB USS pension at 60.
I am expecting on getting approx £16.5K pension p.a. and 3x this as a lump sum, (final figures depend on CPI)
Just out of interest I applied for a CETV which came back at £478,000, this is lower than I expected and to me it seems a no brainer to stay with USS.
Am I missing something?
Thanks

Albermarle

It works out as a multiple of 26 , which is on the lower side. Normally they seem to be >30 and even >40 sometimes .

Apart from the fact it is low , it is also rather difficult to successfully transfer a DB pension, like this , even if the Multiple was higher .

greyhound2022

Thanks Albermarle,

I understand that the FCA advice is that for most people its better to remain in a DB scheme. Had the offer been higher I may have looked to transfer.
I am widowed with no dependents, have a current widows pension of approx 6K p.a (CPI linked), will get a full state pension, have savings of approx 150K and own a property which I can release equity from if required. I'm not sure that I will live well into my eighties, no serious health problems yet, but I'm overweight and take statins and medication for high blood pressure.

In your opinion would I still find it very difficult to transfer?

People on here that have managed to transfer DB pensions, what were your circumstances?

I realise that FAs are worried about claims of mis-selling but surely you should be able to take control of your own finances!!

Albermarle

Presume you are aware that if you did transfer, it would be another type of pension and it would need to be invested in the financial markets ? Have you some experience of that ? How would you feel if you transferred and then the value dropped 25% due to a market downturn ?

I realise that FAs are worried about claims of mis-selling but surely you should be able to take control of your own finance

There are numerous threads on this subject on this forum. Type 'DB transfer' in the search box at the top of the page.

Tommyjw

greyhound2022 said:

Thanks Albermarle,

I understand that the FCA advice is that for most people its better to remain in a DB scheme. Had the offer been higher I may have looked to transfer.
I am widowed with no dependents, have a current widows pension of approx 6K p.a (CPI linked), will get a full state pension, have savings of approx 150K and own a property which I can release equity from if required. I'm not sure that I will live well into my eighties, no serious health problems yet, but I'm overweight and take statins and medication for high blood pressure.

In your opinion would I still find it very difficult to transfer?

People on here that have managed to transfer DB pensions, what were your circumstances?

I realise that FAs are worried about claims of mis-selling but surely you should be able to take control of your own finances!!

Can I ask why regardless of everything else you'd want to transfer it ?

Seems like financially you are set, you'll have the tax free sum to use as you wish plus an ongoing pension of a total amount which seems fine. No property issue to worry about. Savings elsewhere to cover any other costs, car, holiday, etc 

What exactly will you do if you transfer it ? Will you drawdown sums, what for ? Why couldn't you savings cover that and keep the guaranteed risk free monthly money instead ?

Thrugelmir

Schemes have to treat all members fairly. Given the sizable deficit of the scheme.  Offering high CETV's would neither be fair nor sustainable. A mass exodus of members would simply compound the underlying funding issues. 

Southend_2

Thrugelmir said:

Schemes have to treat all members fairly. Given the sizable deficit of the scheme.  Offering high CETV's would neither be fair nor sustainable. A mass exodus of members would simply compound the underlying funding issues. 

The USS deficit is now so greatly reduced that as of last month the scheme says no deficit reduction contributions are necessary. Yet the fiction of underfunding of the scheme continues to be promoted as an excuse to slash benefits for members.

https://drive.google.com/file/d/1XDTFWH1s2BhcGFUat1mwye_nQoDxxl8i/view

Thrugelmir

Southend_2 said:

Thrugelmir said:

Schemes have to treat all members fairly. Given the sizable deficit of the scheme.  Offering high CETV's would neither be fair nor sustainable. A mass exodus of members would simply compound the underlying funding issues. 

The USS deficit is now so greatly reduced that as of last month the scheme says no deficit reduction contributions are necessary. Yet the fiction of underfunding of the scheme continues to be promoted as an excuse to slash benefits for members.

https://drive.google.com/file/d/1XDTFWH1s2BhcGFUat1mwye_nQoDxxl8i/view

£2 billion is still a significant sum. No reason for members that are exiting to receive preferential treatment.  

Southend_2

Thrugelmir said:

Southend_2 said:

Thrugelmir said:

Schemes have to treat all members fairly. Given the sizable deficit of the scheme.  Offering high CETV's would neither be fair nor sustainable. A mass exodus of members would simply compound the underlying funding issues. 

The USS deficit is now so greatly reduced that as of last month the scheme says no deficit reduction contributions are necessary. Yet the fiction of underfunding of the scheme continues to be promoted as an excuse to slash benefits for members.

https://drive.google.com/file/d/1XDTFWH1s2BhcGFUat1mwye_nQoDxxl8i/view

£2 billion is still a significant sum. No reason for members that are exiting to receive preferential treatment.  

I agree on both points. Just pointing out that the deficit is heading rapidly towards zero and the trustee has confirmed that no deficit reduction contributions are now required.  So there is arguably no need to penalise members either. 

ewaste

I wouldn't exactly calling it penalising members. Surely you'd rather there was as much going into the scheme as possible to ensure that the deficit is eliminated and the scheme is in a better overall position. Therefore unlikely to be in the same but possibly worse situation in a decades time. Unless of course you're exiting the scheme sooner rather than later.

I'm a member of another DB scheme and the members and union were obviously against contributions going up last April. Funnily enough the vast majority of members therefore union are much closer to retirement so looking after their own interests first. In fact I'd rather DB schemes were allowed to run a small surplus e.g. 10% without members, unions or the company screwing it up. 

bluenose1

Although it seems most are not allowed to take the CETV,  you could consider taking the maximum tax free lump sum which would provide you with more tax free income. The conversion rates are very generous and would mean you could increase your tax free sum from £49,500 to approx £97,875.
I suppose you could also consider taking the pension  early with an actuary deduction if you dont think you will live to  normal life expectancy. Though you have to factor in inflation, as it is not as attractive as it first seems.