Bear in mind that the transfer value will increase by at least 7 per cent each year if he leaves it there and does nothing. This is due the the unwinding of the discount rate as he gets closer to retirement. There may also be some annual revaluation depending on inflation. All this assumes no funding problem arises but it is getting more difficult for schemes to close without substantial enhancements especially for profitable companies with schemes that are not in deficit. A number of schemes closed recently with enhanced transfer values of the order of six times depending on age and other factors. All trustees and advisors are familiar with the Omega pharma pension case a few years past which changed thinking in this area. So the 20% enhancement brings it to the value in less than 3 years. Not a great deal.
At the Op's age the TV calculation is skewed against him. He has a guaranteed pension from the scheme at retirement. But his TV calculation gives him an amount that must make a return every year ( a bit less when within 10 yrs of retirement) of approx. 7% until retirement to give him a big enough fund to buy that guaranteed pension.
It seems he is in a good scheme and the company is willing to get him out. But their liability on their balance sheet (probably based on a discount rate of approx. 1.5%) is much higher than their TV offer.
It is somekind of betting on the future - personally I would not accept the offer.
Also the more people accept transferring out of the DB scheme - the more secure will be the DB scheme for those who remained.
It is a bit of "gambling"
Are you suggesting that it's in the members interests to remain in the scheme because any future TV is somewhat protected by the Omega case? Is the Omega ruling that significant?
What would happen to TVs if deferred benefits were severely reduced as in the INM case? Would the Omega ruling protect TVs in this instance?
Can you explain what you mean by TV "of the order of six times". What does 6 times refer to?
Of course highly, highly unlikely a return of 7% could be achieved. But as against that, the pension is not guaranteed. Surely that's the nub of this discussion.
I'm coming to the conclusion that it's exactly that - a gamble. And you won't know if you've won until such time as you reach retirement i.e. did the scheme sponsor deliver the promised deferred benefits or was the TV route the way to go.
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