See how transfer values differ across schemes when looking through the lens of the new TVC.
For the first time, our survey will enable trustees and employers to benchmark their own scheme's transfer values compared to other schemes.
The survey results are striking. How generous are transfer values?
- For members ten years away from retirement, the transfer value on offer will on average only be around 55% of the ‘full value’ of the pension given up, according to the FCA methodology.
- The range of transfer values offered by different schemes is very large – with some schemes offering transfer values as little as 40% of the 'full value', and others offering transfer values of more than 80% of the 'full value' – there are good reasons for this, but it may come as a surprise to some members of schemes.
- For members within a year of retirement, the transfer value on offer will typically be higher, with an average transfer value being around 75% of the ‘full value’ of the pension given up.
- As well as typically increasing as members become older, the generosity of transfer values is likely to drift up over time, other things being equal. This is because most occupational pension schemes are gradually changing their investment mix towards lower risk and lower return assets. This makes it more expensive to provide pension benefits and therefore increases the amount schemes are willing to pay someone who is prepared to transfer out.
This defined benefit transfer value comparator survey looked at over 200 schemes from a wide cross-section of UK pension schemes, across all industries, with scheme sizes ranging from less than £100m to more than £10bn.
This research has also been referenced in a joint policy paper with Sir Steve Webb at Royal London.
You might also like...
- Guest blog, Sir Steve Webb, Greater transparency around the real cost of transferring is unlikely to slow the transfer market
- Latest quarterly analysis: All change for DB transfers? - issue 12
- Joint policy paper, Royal London & LCP: What will the FCA's new rules mean for DB to DC pension transfers?
- Press release: New FCA rules on pension transfer values set to shake up transfer market
How we can help
We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.
We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.
We help trustees achieve their strategic goals, with solution-led, appropriate advice.