What do people mean by "pension value"?

MR_Johnson67

On other threads I read stuff like

My private pension value is approx £171K

Do they mean they get £171K annually? 

MallyGirl

MR_Johnson67 said:

On other threads I read stuff like

My private pension value is approx £171K

Do they mean they get £171K annually? 

They mean that they have a DC pension pot which has that much in it available to drawdown 

saucer

Or in public sector pensions it is an estimate of how much you would have to pay for a guaranteed annual pension to a particular level (an annuity).

Marcon

MallyGirl said:

MR_Johnson67 said:

On other threads I read stuff like

My private pension value is approx £171K

Do they mean they get £171K annually? 

They mean that they have a DC pension pot which has that much in it available to drawdown 

...or they've got a defined benefit pension, have obtained a transfer value**, and have completely confused the concept of defined benefit (a promise to pay a pre-determined amount of pension) with defined contribution (where the level of contribution is known, but not the outcome).

**a 'Cash Equivalent Transfer Value' (CETV) from a defined benefit scheme fluctuates all the time, but has no impact on the benefits the member will receive. The value of a defined contribution scheme also fluctuates, but in that case it has a direct impact on the benefits the member will receive.

Silvertabby

saucer said:

Or in public sector pensions it is an estimate of how much you would have to pay for a guaranteed annual pension to a particular level (an annuity).

No, the 'notional' value of a public sector pension is 20 X the annual pension plus 1 X any automatic lump sum.

This would be used in commutation calculations etc, but not more complicated procedures such as a CETV (particularly on divorce) when other factors come in to play.

MallyGirl

This just goes to show that it means different things to different people 

westv

I don't think I have ever seen anybody on here mention their public sector pension pot in relation to the equivalent valuer to buy an annuity. 95% of the time it's as MallyGirl described.

MyRealNameToo

MR_Johnson67 said:

On other threads I read stuff like

My private pension value is approx £171K

Do they mean they get £171K annually? 

In principle they could, there are certainly people with pensions of that size and larger however more likely they are saying what the value of the whole pot is, which makes a lot of sense when it comes to DC as thats all it is (a pot) and can be applied to DB pensions but is more merky in meaning given a DB is a promise of payment not a fixed value pot and how you calculate its ultimate worth varies heavily as market and longevity assumptions change etc and potentially the reason you are asking for. 

coyrls

MyRealNameToo said:

MR_Johnson67 said:

On other threads I read stuff like

My private pension value is approx £171K

Do they mean they get £171K annually? 

In principle they could, there are certainly people with pensions of that size and larger however more likely they are saying what the value of the whole pot is, which makes a lot of sense when it comes to DC as thats all it is (a pot) and can be applied to DB pensions but is more merky in meaning given a DB is a promise of payment not a fixed value pot and how you calculate its ultimate worth varies heavily as market and longevity assumptions change etc and potentially the reason you are asking for. 

I think it's very unlikely that there are people contributing to this forum that have pensions of £171K pa or more.

saucer

Silvertabby said:

saucer said:

Or in public sector pensions it is an estimate of how much you would have to pay for a guaranteed annual pension to a particular level (an annuity).

No, the 'notional' value of a public sector pension is 20 X the annual pension plus 1 X any automatic lump sum.

This would be used in commutation calculations etc, but not more complicated procedures such as a CETV (particularly on divorce) when other factors come in to play.

I stand corrected. However in NHS Total Reward Statement there is an equivalent annuity cost. 

MyRealNameToo

coyrls said:

MyRealNameToo said:

MR_Johnson67 said:

On other threads I read stuff like

My private pension value is approx £171K

Do they mean they get £171K annually? 

In principle they could, there are certainly people with pensions of that size and larger however more likely they are saying what the value of the whole pot is, which makes a lot of sense when it comes to DC as thats all it is (a pot) and can be applied to DB pensions but is more merky in meaning given a DB is a promise of payment not a fixed value pot and how you calculate its ultimate worth varies heavily as market and longevity assumptions change etc and potentially the reason you are asking for. 

I think it's very unlikely that there are people contributing to this forum that have pensions of £171K pa or more.

Why do you think that @coyrls?

I have no proof eitherway but suspect at least some members are very well off.