Enhanced transfer value offer

[Pieface]

Hi,
I am in a defined benefit scheme with a previous employer and they have recently made an Enhanced Transfer Value Offer which means that if accepted, I would no longer be in their defined benefit pension scheme. How do I determine if I should accept the offer?
Thank you.

 

[ClubMan]

Have you already googled and read the many sites offering useful summary info about this issue and question?

 

[Marc]

You absolutely shouldn’t be considering this without competent professional advice.

Ive written a guide which sets out the issues one needs to consider but the first rule here is that it is rarely a good idea to leave a defined benefit pension.

the reason you are being offered an enhancement is to encourage you to leave an expensive and valuable scheme.

Defined Benefit Pensions what you need to know

In the UK, Pension freedoms have given a significant boost to the interest in defined benefit (DB) transfers and despite a requirement to obtain professional advice there have still been widespread examples of mis-selling Financial Advice should be very personal in nature, and the following...

viewer.joomag.com

 

[Duke of Marmalade]

Hi,
I am in a defined benefit scheme with a previous employer and they have recently made an Enhanced Transfer Value Offer which means that if accepted, I would no longer be in their defined benefit pension scheme. How do I determine if I should accept the offer?
Thank you.

I attach extracts from the following post from another thread.

I am not a professional financial advisor but my career was in financial services.
A couple of years back some ex colleagues of Zurich Life came to me for "advice" on their offer of an enhanced transfer value of their deferred pension. I cobbled together a spreadsheet to allow them play with the possibilities. Not surprisingly they all went for the ETV (money in the hand much more desirable than a pension which was guaranteed to be doubled (3% p.a.) in their 80s).
The next bit was where should they invest the money? They were being offered a choice of Zurich's Prisma funds risk rated from 2 to 7 at subsidised AMC. My first almost subconscious piece of advice was that there was no point in looking at alternative fund managers.

As a separate point each of my advisees would probably be thinking in terms of leaving the family home to their estate but not much else and they were aware that in switching from pension to ARF the possibility of "windfall" inheritances arose.
This highlights how important personal circumstances are.

It is a complex subject. Would you care to share more details? You should have been provided with free professional financial advice when you were made that offer, is that the case? I attach the spreadsheet referred to above in this post.
@Marc is of course right that the company making the offer obviously sees it as good value for them. Obviously, if you were to accept the offer and then try to buy the pension you have given up you will lose money. But that does not mean that it cannot be a win/win situation as I believe the Zurich Life example was.

 

[TestFrequentPoster]

This is a test of the attachments procedure

OK, I can't attach something or insert an image

Brendan

 

[Pieface]

Thank you all for your replies. I will read up more on it. And avail of the free professional financial advice on it.

 

[ClubMan]

Thank you all for your replies. I will read up more on it. And avail of the free professional financial advice on it.

What "free professional advice"?
Be careful here - make sure that any professional advisor is working in your best interests and does not have some vested interest in a particular course of action.
In particular be skeptical of any free professional advice that the employer may make available to you as the employer almost certainly has a vested interest in getting you out of the DB scheme.
Pay for your own independent professional advice if necessary.