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Exploring hidden value in CETV’s

We see many examples of people receiving and accepting a cash equivalent transfer value as gospel and what’s more their supposed ‘QROPS pension transfer’ experts that they have engaged do the same. So why do people blindly accept these transfer values? Usually it’s because they feel that the calculations that have produced them are extremely complicated.

 

Our experience shows us that usually there are a couple of key variables which if moved will greatly affect the Cash Equivalent Transfer Values of defined benefit schemes. The best example of this is perhaps best shown from a recent example where we have been working with a client.

 

The client had previously requested a Cash Equivalent Transfer Value for their scheme (prior to working with us) and the value was £194,566 in June 2015. The client came to us in December 2015 by which stage the previous Cash Equivalent Transfer Value had expired a new one was requested in January 2016 and when the forms came back the new value was £177,375. This was a drop in the Cash Equivalent Transfer Value of over £17,000 – a not nice position for the client.

 

When questioned about the fall in transfer value the administrators of the Scheme confirmed the two main reasons were:

  • The increase on the yield on UK Government bonds over the period from June 2015 to January 2016 and
    The lower rate of observed inflation in 2015
  • They went on to state that the transfer value is based on the yield on UK Government bonds. This yield increased by 0.2% per annum over the period, which reduced the transfer value by around £13,000.

 

In addition, the assumed rate of inflation for 2015 used in the June calculation was 2.3%, whilst the actual inflation assumption for 2015 based on the increase in the Consumer Prices Index between September 2014 and September 2015 was slightly negative. This change reduced the transfer value by a further £5,000.

 

We further investigated their claims and found that they were in fact using the FTSE Actuaries Government Securities Over 15 Year index. The yield on this index was 2.4% at 31 May 2015, and increased to 2.6% at 31 December 2015. When we looked at the current value of the index in February 2016 we found that it had dropped to 2.2%. Based on this information we requested a new transfer value for the client knowing that this would lead to a significantly improved transfer value. The new Cash Equivalent Transfer Value cost £420 to get from the UK provider (this is an entirely separate issue) but will yield an increase in value of around £26,000 on the second transfer value that the client received, making a transfer to a QROPS look more attractive.

 

Therefore, this represents exceptional value for money which can be further augmented by a transfer to a QROPS and the tax benefits that will be derived in New Zealand from this.

 

Without our oversight the client would have accepted the new transfer value as gospel and gone ahead and transferred counting the reduction as bad luck. You can’t put a price on good and accurate advice, our fee paled into comparison with the increased value and suffice to say our client was very happy with our service, our fee representing excellent value for money.

 

We work tirelessly to ensure that our clients receive the best advice on their pension transfers and this is just one more example of ensuring that they get the best of their UK pension transfer.

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NZ free phone:0800 102 599 / OZ Free Phone:1800 857 410 / Email:info@qropsnz.com

very stress free

Thank you Cambel for your help and guidance throughout this process in getting my pension transferred (very stress free for me). It is greatly appreciated and I would certainly recommend you and Charter Square to others who are interested in transferring their pension.

David R, New Zealand

You guys rock!

I just wanted to say a great big thank you to you and your team. You are all totally awesome. I received a cheque yesterday from the Prudential to apologise for the ‘recent inconvenience’ that I had experienced. Thank you for doing this for me. You guys rock!

Noelle B, New Zealand

professional, insightful

Charter Square were professional, insightful and a pleasure to work with. They rose to the challenge of consolidating my overseas pensions and bringing them home with minimum fuss for me and maximum effort on their part.

Jens H, New Zealand

thorough, professional and prompt

Very thorough, professional and prompt service from the team at Charter Square. Thanks for making the bewildering world of pension transfers super simple.

Jules T, New Zealand

Best party to deal with

Thank you kindly for keeping in touch with me. For now, I will not be moving my pension. I will however be keeping your details and referring back to you when I wish to pursue. You by far are the best party to deal with, no nonsense, professional and in my opinion genuine. I do sincerely thank you for your advice to date.

GE, New Zealand

Freedom

Securing the freedom to use savings that are actually ours to work with has been stressful in the extreme. While I never planned on giving up there were many times when the current (UK) holder made the whole process seem well beyond my determination and ability. It’s easy to look at the 36 month history of this claim with the benefit of hindsight, but the conclusion is that employing Charter Square in the first instance would have been wise had I been able to anticipate the red-tape that appears to have been deliberately created to stall access.

CP, Auckland
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