Cash Equivalent Transfer Values - outlook

Cobbler_tone

It is well documented that CETV's have plummeted. For example mine was £672k in 2019 and £420k today.

What is the outlook on these?
Are they likely to recover at all or will it be like most things that take years and years to build again, if at all. I understand the links to scheme liabilities but struggle to understand the exact key drivers.

Thanks    

dunstonh

It is well documented that CETV's have plummeted. For example mine was £672k in 2019 and £420k today.

Probably hit £800k in 2021 given those figures.

What is the outlook on these?
Are they likely to recover at all or will it be like most things that take years and years to build again, if at all.

We are back in the typical ballpark now.   And you would have to go back 300 years to get yields similar to those that created the artificially high CETVs.

What we have now is the norm in terms of ballpark.   What you saw post credit crunch until the end of QE was abnormal.    Indeed, yields were still higher pre-credit crunch.  So, still plenty of room for that CETV to fall another 20%-25% to remain in the most common ballpark.   

Cobbler_tone

Mine didn't go up. I have the past 6 years CETV (2019 - 2024) in front of me thanks to a (thankfully completed) dragged out divorce.
The peak on mine was £672k in 2019 and it has dipped year on year since then. 2024 is slightly up (by £5k) vs 2023

Cobbler_tone

For context it is valued at 21 years worth of the full annual pension today, which would obviously grow with inflation, so less in real terms.

dunstonh

Cobbler_tone said:

Mine didn't go up. I have the past 6 years CETV (2019 - 2024) in front of me thanks to a (thankfully completed) dragged out divorce.
The peak on mine was £672k in 2019 and it has dipped year on year since then. 2024 is slightly up (by £5k) vs 2023

That makes it unusual as the peak for the vast majority of CETVs was November 2021.  However, it does depend on how often the system being used updated its assumptions and some variances from scheme to scheme.

2024 would be a bit all over the place with periods of ups and downs in the same ballpark.   Those in May should be giving better than those last month (current is about the same as the 1st Jan).   However, again, it depends on lag on the assumptions used.

As thing stand, you are CETVs are close to median for the long term average.

XPS do a transfer value index to give you an idea of trend:



Unfortunately, it only started in 2016.  If went back another further, you would see the early 2000s lower than current with it being in the same ballpark until 2008 before moving up quickly to the unusual highs caused post credit crunch.

FIREDreamer

Cobbler_tone said:

For context it is valued at 21 years worth of the full annual pension today, which would obviously grow with inflation, so less in real terms.

That would be a NO from me - keep tne DB.

I was offered 30x the early retirement pension in 2019 - I took the pension into payment. I would have deferred until NRD if I had known the LTA would be an ex-LTA.