Tesco DB Pension not performing - transfer?

Hoenir

Given the number of threads on CETV's over the years there still appears to be condsiderable miscomprehension of the topic. Linkage to LDI's is a new concept though. If the plan is to self manage the funds through a SIPP.  Then there's a whole new world to get to grips with. The benign post GFC era appears to be fading fast. 

MarkCarnage

Hoenir said:

Given the number of threads on CETV's over the years there still appears to be condsiderable miscomprehension of the topic. Linkage to LDI's is a new concept though. If the plan is to self manage the funds through a SIPP.  Then there's a whole new world to get to grips with. The benign post GFC era appears to be fading fast. 

This.
As you say, the understanding of the basis for CETVs isn't good in many/most cases. Even when CETVs were very compelling, it is one thing to crystallise what is a very significant sum, and another thing to have a robust investment management strategy for it to meet long term real income requirements on a stable basis with uncertainty over the required timespan. 
"The nastiest, hardest problem in finance" as Nobel prize winner William Sharpe described it. When CETVs were high, there was more margin for error. Less so now. 

dunstonh

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?

Thankfully, there are safeguards in place that would prevent you from making such a silly mistake like that.   

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.

Nothing to do with that at all. 
a) there is no performance issue as its a DB pension
b) your benefits are unchanged
c) CETVs were artificially high due to low gilt yields brought on by QE.   They are now back to the more typical ballpark. But CETVs don't matter to you.   So, why are you even looking at them?

There is no issue here. Just a gap in your understanding.  A bit of reading up should fix that.

smitaly69

I've been looking to transfer my Tesco pension too. It's really annoying not knowing what happening with your own money.
I haven't worked there for years. Last year it was Worth £19000 to transfer ,this year 17000 to transfer. So is it a different figure again if I wanted 25% tax free ?? Thanks.

Dazed_and_C0nfused

smitaly69 said:

I've been looking to transfer my Tesco pension too. It's really annoying not knowing what happening with your own money.
I haven't worked there for years. Last year it was Worth £19000 to transfer ,this year 17000 to transfer. So is it a different figure again if I wanted 25% tax free ?? Thanks.

If this is a defined benefit pension you could think of it more like deferred salary, not a pit of money to drawdown as you wish.

There may be a tax free pension commencement lump sum but if it's a defined benefit scheme the amount will be set by the scheme rules.  For example, 3x your pension rather than being 25% of anything.

smitaly69

Am I a troll ?? Not at all , I know nothing about pensions

Bostonerimus1

smitaly69 said:

Am I a troll ?? Not at all , I know nothing about pensions

So I hope both you and the OP will now read the posts that have addressed the original question better than I did and come back with questions so you can gain some knowledge to make good financial decisions.

Marcon

smitaly69 said:

I've been looking to transfer my Tesco pension too. It's really annoying not knowing what happening with your own money.
I haven't worked there for years. 

It isn't your own money where a defined benefit (DB) scheme is concerned. It's a guaranteed promise to pay you a regular annual income for life once you start to draw your benefits, usually with the option to take a lower starting level of pension in exchange for a one-off tax free lump sum.

As to what's happening with it - the pension you built up while working for Tesco is increasing each year from the time you left until you start to take your benefits from the scheme.

smitaly69 said:

Last year it was Worth £19000 to transfer ,this year 17000 to transfer. So is it a different figure again if I wanted 25% tax free ?? Thanks.

A transfer value from a DB scheme represents the scheme's 'best estimate' of how much it would cost the scheme to provide your future benefits. A transfer value is only guaranteed for 3 months from the time that value is calculated. If you don't transfer out within that period, it would be recalculated when you next request a current transfer value. Be aware that you are only entitled to one 'free' quote in any 12 month period; if you ask for more than one, the scheme can charge (£500 is not unusual) to provide this, or decline to do so.

So yes - likely to be a different figure, which could be either higher or lower, depending on various factors - in particular interest rates.

smitaly69 said:

Am I a troll ?? Not at all , I know nothing about pensions

Try a bit of basic reading: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics

Albermarle

smitaly69 said:

I've been looking to transfer my Tesco pension too. It's really annoying not knowing what happening with your own money.
I haven't worked there for years. Last year it was Worth £19000 to transfer ,this year 17000 to transfer. So is it a different figure again if I wanted 25% tax free ?? Thanks.

Although in reality the value of the pension mainly came from large contributions from the employer, rather than from yourself.

Aretnap

smitaly69 said:

I've been looking to transfer my Tesco pension too. It's really annoying not knowing what happening with your own money.
I haven't worked there for years. Last year it was Worth £19000 to transfer ,this year 17000 to transfer. So is it a different figure again if I wanted 25% tax free ?? Thanks.

You do know what's happening with your own money. From a certain age you will get a pension of £X per month; that number will be available from the pension scheme and the numbers never change, except in that the amount increases every year by some measure of inflation. The exact increase will be defined in the scheme rules.

The "transfer value" doesn't really have anything to do with what's happening with "your own money"; it's basically the amount that the pension trustees are willing to offer you to make you go away and give up your right to recieve a pension of £X per month. That amount changes from time to time depending on factors like long term interest rates, which affect how much it costs the trustees to guarantee your income, and on just how keen they are to get rid of you at a particular moment.