CETV - CRASH in VALUE
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Received the annual CETV on my DB pension yesterday only to see it had dropped by a massive 33%. (92k - 61k)
Called them to see why and was told it can change from day to day. Have the opportunity to speak to the actuaries if I wish but am wondering if it is worth waiting another year to see if it will change.
I suspect that the scheme is not performing as well as expected but would be interested to hear any thoughts/ideas others may have?
Thanks
Called them to see why and was told it can change from day to day. Have the opportunity to speak to the actuaries if I wish but am wondering if it is worth waiting another year to see if it will change.
I suspect that the scheme is not performing as well as expected but would be interested to hear any thoughts/ideas others may have?
Thanks
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Comments
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The actuaries will be able to tell you more than anyone here can. If you let us know what they say we can comment on whether it makes sense.
When you say "if it is worth waiting another year" - waiting for what? Have you already decided or been advised to transfer out? What stopped you from doing it last year?0 -
but am wondering if it is worth waiting another year to see if it will change.
It changes all the time. It could well be a lot lower in 12 months.
The increased transfer values are a short-term blip that will reverse sooner or later.
Gilt Yields move daily. They hit their lowest point last August and increased towards the end of the year until around Feb where they fell back again a little although they are currently on the rise again and not far off where they were in 2014.
There are more assumptions used than just gilt yields but they are the key reason for the big movements that have occurred. You say annual which suggests around the same time of year, then gilt yields are about 30% higher than what they were this time last year.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Yep the actuarial destroyers know all the answers ... but strangely they seem more often or not very very reluctant to clarify their black art, quite the opposite in fact:Malthusian wrote: »The actuaries will be able to tell you more than anyone here can. If you let us know what they say we can comment on whether it makes sense.
When you say "if it is worth waiting another year" - waiting for what? Have you already decided or been advised to transfer out? What stopped you from doing it last year?
Willis Towers Watson got a bit aeriated last time I asked enough questions to get sent a telling breakdown which I then reverse engineered to understand what they thought was their secret tool for calculating CETVs including mine. Unfortunately they know you need above average maths skills to do that so the best you can expect is that they will bamboozle you unless you've got those skills.
The CETVs on your scheme were perhaps enhanced for just a short window to allow insiders with the biggest CETVs to grab the money and run, and then the doors have been slammed shut behind on the little people who weren't sure what they were supposed to do last year because of mixed messages in forums like this.0 -
Wasn't ready to retire last year was the main reason I didn't do anything. I am fit, well and active but a recent health scare has had me re-thinking pensions, the tests results I have had now mean I need an internal examination so I will know more after that in a few weeks!!
That apart I am just looking at my options now with a view to stopping work later this year, I can afford to wait another year if it is worth it as the scheme is gaining added years on the DB side.0 -
Assuming you have already passed the scheme's Normal Retirement Age, might the most pragmatic next step simply be to take the pension now?0
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Sorry, hadn't seen your last post.0
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:) That thought had crossed my mind.
Is it worth challenging them or will that not achieve anything and leave me open to revenge next year?0 -
A thought which as an old cynic, crosses my mind more than frequently. Depends whether you have the ability to take their calculation apart and show them where they have been unreasonable. It is next to impossible to get them to adjust however I got an extra 5% on one occasion when I highlighted an error of 10%, but they reduced it to 5% by adjusting something else they said they'd been too generous on. There are usually several lines of calculation for even the simplest deferred cases (if you do it manually). Their automated tools are sometimes accurate, and sometimes not quite coded correctly. The first CETV you get will probably be an automated answer.:) That thought had crossed my mind.
Is it worth challenging them or will that not achieve anything and leave me open to revenge next year?
They kid you the parameters they inject into the calculations are all scientifically reasoned, but that's just multi-layers of smoke screen hiding the true pressures from upstairs and other intents behind the scheme. In the case of big banks, they're all in it together of course, so the special autonomous sections of Unite The Union keep the CETVs nice and rosey for all the old stager traders and managers who might need the cash for something else, like trading in their own bank shares on nods and winks.
On balance, I'd say for most people life is too short at retirement age to get wound up about such ... I do, but that's me!
The trustees and actuaries and other pullers of the levers of power in these things (on behalf of the unnamed upstairs of course) know that too. They trust you will accept their judgement quietly so they can keep taking the fees and salaries in the name of practising fairness. It's a tough old job for them, stuck between a rock and a soft place <-- the members
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:) That thought had crossed my mind.
Is it worth challenging them or will that not achieve anything and leave me open to revenge next year?
Determining CETVs is a mathematical calculation, revenge doesnt come into it. You can only sensibly challenge them when you understand why the CETV is what it is, and the chances are that when you have that understanding you will see there is nothing to challenge them on.
So take up the opportunity of talking to the actuary, and pls let us know what he/she says.0 -
Revenge might not, but subjectivity comes into it all the time, Linton.
As I said, I already know exactly how my last CETV was calculated.
It was calculated on a software tool marketed by WTW who are probably the biggest firm of scheme actuaries and administrators in the country, and it contained errors which were only discovered on my instigation. As with all software, GIGO - Garbage In Garbage Out and part of the Garbage In is often faulty code.
So it was recalculated manually and total subjectivity came into how the trustees and WTW dealt with the errors - as I said, they claimed they found more errors which offset the major error I had noticed.
They weren't particularly apologetic, and as I say were a bit aeriated at having to deal with my enquiry at such a detailed level of criticism. Revenge might be slightly too strong a word for what goes through aeriated staffers' minds, but from year to year there is plenty of scope for massaging what CETVs go out to individuals who may or may not have asked for them previously, and may or may not have easily accepted them as gospel.0
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