Tesco DB Pension not performing - transfer?

Kent_guy

Hi.
i have a pension with Tesco and due to retire in 7 years time.
My Transfer Value has almost halved in 4 years and probably brought on by the £9Billion losses from LDI’s that surfaced in the news in 2023. It’s still underperforming in 2024.
I have a SIPP currently performing with a very good return but would it be a good thing to get that Tesco pension transferred to it to recoup?
Thanks

Silvertabby

If this is a DB (final salary) pension, then it's only the transfer value that has dropped in the last few years, not the 'promise to pay £X per year pension'.

 

TheSpectator

How can a DB pension 'underperform'?

MallyGirl

If it is a final salary pension then performance is not a factor- you will get what the rules of your scheme says you get. CETVs have fallen in recent years. Transferring a FS - if CETV is above £30k - requires advice that will cost you £000s

molerat

In what way is the pension not performing ?  With a DB the transfer value has nothing to do with the way the company is managing the pension funds but due to the change in the cost of providing the pension, 4 years ago it would have cost twice as much to provide your benefits than it does now due to the value of gilts hence the reduced amount "to get you off their books".  The transfer value is of no consequence to the benefits the pension will provide.

DRS1

Kent_guy said:

Hi.
i have a pension with Tesco and due to retire in 7 years time.
My Transfer Value has almost halved in 4 years and probably brought on by the £9Billion losses from LDI’s that surfaced in the news in 2023. It’s still underperforming in 2024.
I have a SIPP currently performing with a very good return but would it be a good thing to get that Tesco pension transferred to it to recoup?
Thanks

So now sounds like a bad time to transfer out - even assuming you could get advice saying it was OK.

What sort of pension is the Tesco pension? DB I am guessing.

Marcon

DRS1 said:

Kent_guy said:

Hi.
i have a pension with Tesco and due to retire in 7 years time.
My Transfer Value has almost halved in 4 years and probably brought on by the £9Billion losses from LDI’s that surfaced in the news in 2023. It’s still underperforming in 2024.
I have a SIPP currently performing with a very good return but would it be a good thing to get that Tesco pension transferred to it to recoup?
Thanks

So now sounds like a bad time to transfer out - even assuming you could get advice saying it was OK.

What sort of pension is the Tesco pension? DB I am guessing.

The clue is in the title to this thread...

IAMIAM

I have the same, the old tesco defined benefit scheme. My transfer value in 2015 was 140k, then it went to 90k, then it was 35k and remains around this. I have checked it regularly every year. What Tesco have done is actually correct, they have ensured the old final salary pension scheme has enough funding to pay its commitments. If you read the reports, they have continually reduced the deficit with more funding. 100% correct in my opinion.

So now, instead of having high CETV values when they were in trouble and wanted to offload liabilites, they have funded so now have no issues paying their commitments. My DB Pension with tesco has gone from 4.5k per year to 5.5k per year and I will presume its going to be around 10k per year when I want it in 20 years time.

Leave it alone. 

Marcon

Kent_guy said:

Hi.
i have a pension with Tesco and due to retire in 7 years time.
My Transfer Value has almost halved in 4 years and probably brought on by the £9Billion losses from LDI’s that surfaced in the news in 2023. It’s still underperforming in 2024.
I have a SIPP currently performing with a very good return but would it be a good thing to get that Tesco pension transferred to it to recoup?
Thanks

Transfer values in defined benefit schemes always have this capacity to mislead the unwary, so you're far from alone. The transfer value in a DB scheme doesn't matter. You have a benefit promised by a formula set out in the rules of the Tesco DB scheme, and the employer is on the hook to pay enough money into the scheme to ensure it can pay the promised benefits as they become due.

Have a look at the Summary Funding Statement you are sent (roughly) each year, and that will give you details of any deficit and (if necessary) any 'recovery plan' in place to ensure the scheme returns to/stays in good financial health.  

DRS1

Marcon said:

DRS1 said:

Kent_guy said:

Hi.
i have a pension with Tesco and due to retire in 7 years time.
My Transfer Value has almost halved in 4 years and probably brought on by the £9Billion losses from LDI’s that surfaced in the news in 2023. It’s still underperforming in 2024.
I have a SIPP currently performing with a very good return but would it be a good thing to get that Tesco pension transferred to it to recoup?
Thanks

So now sounds like a bad time to transfer out - even assuming you could get advice saying it was OK.

What sort of pension is the Tesco pension? DB I am guessing.

The clue is in the title to this thread...

Yes Thanks.  I had second thoughts when I read the first line of the post and did not look up to the heading.

MarkCarnage

Judging by the comments in a few recent threads, the falls in CETVs are setting a whole field full of hares running.....none of which is justified. 
Most DB schemes are in a better funding position now than they have been for many years. That is what pays the pensions. Not CETVs. Taking a CETV now (on the rather heroic assumption that a regulated adviser would actually sign off on it) would almost certainly not be a good decision. Focus on the (at least partially) inflation linked pension for life that DB schemes provide. The CETV ship has sailed and is unlikely to return to port.