USS CETV very low.

dunstonh

I just requested a CETV from the USS, not because I want to transfer out but because I am mortgaging my property beyond normal retirement age and the lender wanted proof that I would have the means to pay off the mortgage should I need to.

A CETV is not what the lender is looking for as it has no relevance to being able to repay the mortgage.

Lenders are normally after the benefit statement that gives a projection of income and/or lump sum entitlement at scheme retirement age.

You would have to be mad to transfer at this rate even if you could

in 9 out of 10 cases, it is unsuitable to transfer a DB pension.  Especially as CETVs have returned to their historical ballpark.

They originally asked for the "Transfer Value" whatever that was supposed to mean.

That applies to DC pensions.

It sounds like there is some miscommunication going on.

hugheskevi

Albermarle said:

Also some public sector schemes will not allow transfers at all, so presumably no CETV would be supplied.

Transfers to DB schemes are still permitted, and CETVs are needed for divorce. So a public sector scheme would still supply a CETV.

Asimovs_nightfall

hugheskevi said:

Albermarle said:

Also some public sector schemes will not allow transfers at all, so presumably no CETV would be supplied.

Transfers to DB schemes are still permitted, and CETVs are needed for divorce. So a public sector scheme would still supply a CETV.

Off topic, so apologies, but what does a DB CETV do to inform divorce proceedings? 

Universidad

swindiff said:

I was surprised at how low the CETV was.

Mine last year was far lower than that as a proportion - and in fact was significantly less than has been contributed over the years, even unadjusted.

The thing about a CETV is that it doesn't reflect the value of the pension to you. 

What it should reflect, apparently, is the amount of money USS believe they would need to invest in order to meet their obligations to your pension.

Though I will say there is a mismatch between their pessimism about investment performance when looking at each new round of cuts, and their optimism about investment performance when they can give you less of your money back...

hugheskevi

Asimovs_nightfall said:

hugheskevi said:

Albermarle said:

Also some public sector schemes will not allow transfers at all, so presumably no CETV would be supplied.

Transfers to DB schemes are still permitted, and CETVs are needed for divorce. So a public sector scheme would still supply a CETV.

Off topic, so apologies, but what does a DB CETV do to inform divorce proceedings? 

Although extremely assumption-ridden, it is the best valuation of the pension available to be included in totalling up and dividing the assets involved in the divorce.

The pension could be split, but other approaches are possible.

One of the odd consequences of the public service pension scheme transfer restrictions is that working in pensions it is not uncommon for colleagues to ask either how to get a CETV or if I could estimate what the CETV would be. These days, that only means they are getting divorced.

OldScientist

Universidad said:

Though I will say there is a mismatch between their pessimism about investment performance when looking at each new round of cuts, and their optimism about investment performance when they can give you less of your money back...

Not surprisingly, a similar mismatch exists between converting DB income to lump sum and converting investments/lump sum to DB income.

To be fair to USS, they are legally required to look at 1 in 100 (?) year worst cases for funding ratio calculations - of course, what that worst case might be depends on a lot of assumptions. But, I probably shouldn't derail the thread.

Marcon

Pat38493 said:

Marcon said:

swindiff said:

My mortgage advisor thought it was very strange.

This was the wording of the request

Please provide Details of all Retirement income confirming current pension transfer value and Current Annual income if drawn - this is required for Underwriter affordability assessment.

I think they're actually asking for transfer values of defined contribution schemes (not CETVs, a term specific to DB schemes), but it's still a poorly worded question as they don't ask for details of projected DB benefits/potential retirement lump sums, which would be much more informative.

This was my reaction as well but then thinking about it, isn't a CETV valuation kind of legally binding document - it usually says "this value is confirmed correct until date x".  On the other hand, a pension estimate of what benefits you will get when you start drawing the pension, carries no legal or contractual weight, and as we've seen on this forum on occasions can be completely wrong, or at least inaccurate. 

Not much good when the guarantee period only lasts for 3 months from the date of calculation and you are looking at repaying a long-term commitment like a mortgage. Nor is it legally binding - a CETV has been changed or withdrawn (eg if a mistake is made during the calculation). An estimate of the DB pension is far more use.