How Much Is Your Final Salary Worth?

Not all transfer values are created equally. The bigger your employer, the more generous your transfer value is likely to be. Large financial companies, banks, insurance companies and FTSE 100 companies tend to offer the best transfer values.

In the recent months, we have seen transfer values (the capital value of the benefits promised by a scheme, sometimes called the CETV or Cash Equivalent Transfer Value) at unusually high levels – sometimes as much as 40x the annual pension income.

This has been driven by many factors including the recent reductions in government bond returns exacerbated by the Brexit vote and also the measures taken by The Bank of England to prop up the economy. It is fair to say that this combination of factors is unusual and likely to be short lasting. ]

When Bond returns revert to their traditional range, it would be reasonable to expect transfer values to reduce back to the norm of say 23x the actual pension income. So at present there is a window of opportunity to unlock quite a bit of value from your defined benefit/ final salary pension which cannot be expected to last.


This is a good time to review whether your final salary pension is in the right place. To calculate the transfer value, we would require you to ask your scheme trustees or pension administrator to provide a cash equivalent transfer value (CETV). A CETV is designed to revalue your pension from the date of leaving service to the date of retirement using inflation assumptions and then capitalises this income using interest rate assumptions, before discounting this figure to the present day using investment return based assumptions.

At present, transfer values can be hundreds of thousands of pounds, sometimes even millions of pounds.

We can give you an idea on your real transfer value to help you make an informed decision as to whether transferring your Final Salary Pension is right for you.