Pension Transfer Value

Debt_Free_Chick

Retired_I.F.A. wrote: »

Where is the difference between me saying the discount rate is based on the actuaries assumption of x% p/a for equities and you saying it's based on the assumption of the difference assumed between bonds and equities plus bonds? There is no difference, the answer is still the same.equity assumption just expressed differently.

The difference is that where the discount rate is expressed as an addition to the bond yield, then the discount rate changes when the bond yield changes. The discount rate and transfer basis has nothing to do with actual equity returns and everything to do with actual bond yields.

The bond yield has increased since September, so the transfer value will have gone down.

Conversely, equity returns have reduced, but this is not reflected in the discount rate.

Okay it's great for members of schemes such as BA where they stipulate its 0.5% plus the bond yield. That's giving those looking at transferring a defined discount rate and I'd say a bloody good one too everyone should transfer retained benefits from them.

Really?

Retired_I.F.A.

Where it's expressed as an addition to the bond yield then yes I stand corrected (I did say it's been a while didn't I ? )

With "every scheme I've managed in the past 10 or so years uses this method" then okay many transfer values are a lot fairer than they were in the past but they are still open to manipulation by employers though arent they? You said yourself: "the Trustees decide (in consultation with the company)"

In the Occupational Pension Schemes Transfer values ammendment regulations 2007 effective from 6/4/08 (see 7b 3)page 28 or just after of my link above) there is no stipulation that discount rates must be on a current gilt plus premium basis. Seems to me it's just another step in the right direction, that of making final salary schemes so fair they close down completely. Lets face it they've been an employers scam since they first came about.

really?

Well yes, get a fair transfer value like presumably BA's are then history and common sense tells me the odds are greatly in favour to end up with more from transfeing to equity investment than gilts plus 1/2% let alone the better death benefits flexability drawdown etc etc.

Anyways I bow to your far more up to date knowledge of final salary schemes. In fact I think I'll make this the last thead I post in on this forum. Out of date knowledge and out of date opinion does no one any good. I'm just glad I was never in one.

EDIT:
Actually I was come to think about it, a great one apparently one of those non contributary 60ths schemes. I asked for a transfer value after 5 years membership only to find the transfer value was not enough to buy me back into SERPS. and they talk about free money! ha is it hell as like.

Debt_Free_Chick

Retired_I.F.A. wrote: »

In fact I think I'll make this the last thead I post in on this forum. Out of date knowledge and out of date opinion does no one any good. I'm just glad I was never in one.

FWIW, I've always found your posts valuable. And to be fair, you usually do caveat them with a "it's been a while since I did this type of work but ...."

I wasn't trying to score points, honest As is always the case, it's difficult to see what one's intentions are without the usual body language.

Anyway, everyone who knows me will tell you I come across like a general know-all :rotfl: even though my intention is to share knowledge

Retired_I.F.A.

No no I don't see you as that at all. Admittedly I did with just seeing the initial "it's bonds" reply of yours and I bit my tongue and wrote "that's gobblygook" instead of my initial reaction of "how many l's in bo??ocks?" but you then clarified it and made me realise you know what you talking about and in doing so it emphasised in my mind how much has passed me by.

I remain no fan of final salary schemes though. People, especially on this board think they are the bees knees but they don't realise there is no such thing as free money and have short memories. Granted the legal compensation now in force if a scheme goes under favours keeping retained benefits but seeing that BA scheme and you saying many now do likewise it will no doubt provide better transfer values especially if the next bit of legislation rules that the calculation of them must ignore any underfunding problems and as I see it now that's all the more reason to transfer retained benefits to ones own money purchase plan.
It seems the timing of when to transfer is all the more important now as bondo must realise if he's still following this thread.