We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
HSBC DB Pension Transfer Value has gone down
Comments
-
Is this the same type calculation method used to purchase an annuity or whatever? If I cashed in my DB scheme, would I then find that the price to purchase an identical annuity was similar?Different calculation method but both use gilt yields in their calculations.
Whilst level annuities have gone up, indexed annuities have not because the risk assessment on inflation is using higher assumptions which reduces the annuity rate. So, effectively you have gilt yield improving it and inflation assumption reducing it.It is a value put on the liability.
I wonder if these are true representations of the value at any point in time in the real world.(if I could have got past the required advice situations).Just over a year ago, it would have been possible without much difficulty. The cheap factory line firms had gone (the ones that caused the problems) but plenty would have still been able to do it. Most bank DB schemes were pretty easy to justify moving out on the basis of the CETV. Whereas now, its very hard to justify.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
Pat38493 said:It is nothing to do with the underlying investments. It is to do with the calculation of the CETV, which includes gilt yields as a multiple.
DB schemes are run as a service to members, and pay the benefits promised by the rules.
The CETV offered by a scheme also takes into account the manner in which the scheme's assets are invested and what the return on these assets is projected to be. The insurer will take a much more pessimistic view of the future!Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1 -
There were some very generous CETV values provided a year or two ago, values that probably won't be matched for a very long time in terms of multiples of annual pension. I had a very good offer on mine, annual pension £5k , CETV £170k , growth of 3% pa would have matched the annual pension with the fund value not being eroded. If it hadn't been so ridiculously hard to turn that on paper CETV into cold hard cash I'd have probably done it and could have bought an annuity now several times what the DB pension annual pension is forecast to be. Unfortunately that horse has bolted now but I do feel those who said you should never transfer a DB pension weren't exactly vindicated by what's transpired since, personally for myself I think it would have been a very wise move but hey ho, no point crying over spilt milk eh...1
-
and could have bought an annuity now several times what the DB pension annual pension is forecast to be.
Sorry, that does not seem credible. Even with todays improved annuity rates, to buy a lifetime annuity of £5k pa at 65, with a capped link to inflation and 50% spouse payout ( all pretty standard and probably similar to your DB pension) would be in the region of £125K
0 -
Albermarle said:and could have bought an annuity now several times what the DB pension annual pension is forecast to be.
Sorry, that does not seem credible. Even with todays improved annuity rates, to buy a lifetime annuity of £5k pa at 65, with a capped link to inflation and 50% spouse payout ( all pretty standard and probably similar to your DB pension) would be in the region of £125K
Conclusion for me is that there was a period about a year ago when CETVs were generously "overvalued". I'm sure overvalued is not right technical word but what I mean is that it would be hard to justify not doing a transfer if you analyse the figures and could actually do one. By chance I happened to request a CETV at that time and I remember being astonished at how high it was.
I had only just started to seriously prepare for retirement and I was, and still am, missing a lot of knowledge, but if I had known a year ago what I know now, I probably would have tried to find a way to transfer it. It might have been though that by the time I managed to find a route to do it, the CETV would have expired and then I would have already got a much lower one!0 -
Marcon said:TheGoldfish said:So basically they are not as keen/desperate to get rid of me as they were a year a go?0
-
Pat38493 said:Albermarle said:and could have bought an annuity now several times what the DB pension annual pension is forecast to be.
Sorry, that does not seem credible. Even with todays improved annuity rates, to buy a lifetime annuity of £5k pa at 65, with a capped link to inflation and 50% spouse payout ( all pretty standard and probably similar to your DB pension) would be in the region of £125K
Conclusion for me is that there was a period about a year ago when CETVs were generously "overvalued". I'm sure overvalued is not right technical word but what I mean is that it would be hard to justify not doing a transfer if you analyse the figures and could actually do one. By chance I happened to request a CETV at that time and I remember being astonished at how high it was.Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!1 -
Marcon said:Pat38493 said:Albermarle said:and could have bought an annuity now several times what the DB pension annual pension is forecast to be.
Sorry, that does not seem credible. Even with todays improved annuity rates, to buy a lifetime annuity of £5k pa at 65, with a capped link to inflation and 50% spouse payout ( all pretty standard and probably similar to your DB pension) would be in the region of £125K
Conclusion for me is that there was a period about a year ago when CETVs were generously "overvalued". I'm sure overvalued is not right technical word but what I mean is that it would be hard to justify not doing a transfer if you analyse the figures and could actually do one. By chance I happened to request a CETV at that time and I remember being astonished at how high it was.
From what I understood of other posters that was very unusual, and in “normal” times it would not be so easy. I never sought formal advice on the matter because I actually got the impression from the internet (including this forum) that I would find it next to impossible to get a positive recommendation.
I also remembered in the meantime this evening that with my DC scheme, if I had transferred my DB pension out I would have been already bumping the LTA and I am not 55 for another year. This was another reason why I didn’t pursue it further.
Also I suspect it would be impossible to make a complaint about being advised not to transfer until very many years later when you could show that you would have been better off with the transfer money.0 -
Pat38493 said:Marcon said:Pat38493 said:Albermarle said:and could have bought an annuity now several times what the DB pension annual pension is forecast to be.
Sorry, that does not seem credible. Even with todays improved annuity rates, to buy a lifetime annuity of £5k pa at 65, with a capped link to inflation and 50% spouse payout ( all pretty standard and probably similar to your DB pension) would be in the region of £125K
Conclusion for me is that there was a period about a year ago when CETVs were generously "overvalued". I'm sure overvalued is not right technical word but what I mean is that it would be hard to justify not doing a transfer if you analyse the figures and could actually do one. By chance I happened to request a CETV at that time and I remember being astonished at how high it was.
From what I understood of other posters that was very unusual, and in “normal” times it would not be so easy. I never sought formal advice on the matter because I actually got the impression from the internet (including this forum) that I would find it next to impossible to get a positive recommendation.
I also remembered in the meantime this evening that with my DC scheme, if I had transferred my DB pension out I would have been already bumping the LTA and I am not 55 for another year. This was another reason why I didn’t pursue it further.
Also I suspect it would be impossible to make a complaint about being advised not to transfer until very many years later when you could show that you would have been better off with the transfer money.0 -
Albermarle said:Pat38493 said:Marcon said:Pat38493 said:Albermarle said:and could have bought an annuity now several times what the DB pension annual pension is forecast to be.
Sorry, that does not seem credible. Even with todays improved annuity rates, to buy a lifetime annuity of £5k pa at 65, with a capped link to inflation and 50% spouse payout ( all pretty standard and probably similar to your DB pension) would be in the region of £125K
Conclusion for me is that there was a period about a year ago when CETVs were generously "overvalued". I'm sure overvalued is not right technical word but what I mean is that it would be hard to justify not doing a transfer if you analyse the figures and could actually do one. By chance I happened to request a CETV at that time and I remember being astonished at how high it was.
From what I understood of other posters that was very unusual, and in “normal” times it would not be so easy. I never sought formal advice on the matter because I actually got the impression from the internet (including this forum) that I would find it next to impossible to get a positive recommendation.
I also remembered in the meantime this evening that with my DC scheme, if I had transferred my DB pension out I would have been already bumping the LTA and I am not 55 for another year. This was another reason why I didn’t pursue it further.
Also I suspect it would be impossible to make a complaint about being advised not to transfer until very many years later when you could show that you would have been better off with the transfer money.0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.9K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 243.9K Work, Benefits & Business
- 598.8K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards