How to Value Your Final Salary Pension

Look Out Your Scheme Booklet

LOOKING FOR A FIRM WITH TEAM MEMBERS WHO HAVE 30 YEARS EXPERIENCE IN DEALING WITH FINAL SALARY TRANSFERS? 

 

LOOK NO FURTHER 

 

At Sancus Retirement Planning we have real concerns about the quality of advice being offered currently to those who have Final Salary Pension Scheme Benefits and whom are looking at transferring out. Whilst transfer values are at record highs, for the vast majority of people retaining their gold plated retirement income, is still very much in their interests……………………..this is not a view you will hear being shouted all that often from IFA rooftops.

 

Pension “freedoms” have, since April 2015, opened up the flexibility available and this is of course, an attraction for a good number of people. However, at Sancus Retirement Planning Limited we will only undertake this work on the basis that clear retirement income objectives have been set. Provided the figures are realistic and sustainability of income can be achieved via realistic investment returns, only then will we embark on the advice process of considering whether a Final Salary Transfer is suitable.

 

What is the value of your pension scheme?

 

Whilst there are various complicated ways to calculate the value of your deferred pension, as a rule, to work out what it might be worth on transferring out, the scheme Actuary will use a number multiple of the benefit you have already accrued. As an example; the benefit accrued equates to £10,000 as at today and the Cash Equivalent Transfer Value could range from anywhere between £250,000 and £400,000. Whilst this example is based on 25 – 40 times I have seen lower and of course more recently higher multiples than 40.

 

There is great disparity in how the pension scheme administrators detail how the Cash Equivalent Transfer Value (CETV) has been arrived at and so a careful review of the numbers is vitally important.

 

Transfer values are only available to "deferred members" of schemes. This means that you have left the company scheme (but not necessarily the employer), or you are about to leave the scheme, but have yet to start your pension. 

 

• You can ask your old employer/pension scheme administrator for a transfer value. This can take a few weeks to produce and it will be valid for 3 months from the date of issue. 

• The transfer value will depend on your age, the level of forecast pension when you retire, your retirement date and how generous the annual increases are on your pension both in deferment and when it gets paid. The CETV figure is guaranteed for 3 months from the date of issue. 

• In recent years we have seen CETV quotes from an increasing number of schemes with incredibly generous numbers, with some clearly looking to reduce the risk liability of the scheme by encouraging deferred members to leave. 

• Anyone looking to transfer a defined benefit pension with a value of £30,000 or more is required to take advice from a pension transfer specialist. This is where Sancus Retirement Planning’s transfer specialist can assist.

 

Please contact info@sancusrp.co.uk for more information, help and guidance on our Final Salary Transfer Advice Service.