Transfer Value has fallen

Hi

Received a transfer value this time last year of €22,000 and did nothing at the time. Recently requested an up to date value and was advised that it was €9,000.

My question, should I stay or should I transfer out given the above?

Any views appreciated

Thanks

Bedlam

Not enough information.
I assume you are in a Defined Benefit scheme. If the transfer value has more than halved in a year, that's unusual. The scheme must be significantly underfunded.
Why are you being offered a transfer value?
Have you left service?
Is the scheme being wound up?

More detail please.

Hi Conan

Yes I left service last year it is a DB scheme and the transfer is one of the options offered.

I was very surprised by the size of the drop in a 12 month period and thus my reason for asking "should I stay or should I go?

Thanks

Bedlam

Still seems like a large fall. I think you need to ask more questions of the Trustees as to why the fall in value.
As to what to do, I think you need to consider:
- how long to your normal retirement
-do you have any other pension benefits
- what is the deferred pension
- what is the likelihood that the fund will be able to pay the deferred pension

If the transfer value is only €9,000 it suggests that the deferred pension is either small or you are a long way off retirement. It may be a case of "a bird in the hand... " etc.

Most likely reasons for significant fall in such a short period are :

- your deferred pension was cut by a Section 50 order as a means of cutting the deficit; but you should have received a letter from trustees, if this happened.

- more members ahead of you have retired during the year; as retirees they have first claim on the scheme assets on wind up and hence your transfer value is reduced accordingly to reflect what you'd get on wind up.

Impossible to advise you without the full facts. Yes, its possible for your TV to become nil; I have seen that happen.

You'd need to contact trustees and ask for latest actuarial report, and if the scheme is in deficit, what funding proposal did they submit to the Pensions Board by the 30th June 2013 deadline.
Also suggest you contact a former colleague who still works there to get the 'lie of the land' about your former employer's financial circumstances and the state of the pension scheme. People at work tend to hear the bad news long before those who have left service.

There were proposals to change the priority order of windup to allow non-pensioners a greater slice of available funds. But they have been put on hold by Joan Burton.
If the proposals do come into law then you would likely receive a greater transfer value.
But nobody knows.
Joan Burton's delay in many areas of pension reform is leaving many members in the wilderness.
And the muddle that will ensue next year with aboliition of the state transition pension and its effect on integrated DB schemes is still yet to come.

Most likely reason here is that the figure of 22K didnt take account of the schemes solvency position i.e. it was the full value of your benefits which unfortunately isn't funded fully.