CETV

Question 1

What does a Statement of Entitlement show?

Answer 1

REGISTERED LAST

• Revaluation rates
• Escalation rates
• GMP
• Ill health
• Spouse benefits
• Transfer Value _CETV
• Equalisation
• Rules (Scheme)
• Early Retirement
• Discretionary Increases
• Lump Sum
• April 97
• Surplus or Solvency
• TFC

Question 2

Why has CETV gone Up?

Answer 2

Scheme funding position may have improved

Scheme discounting rates may be reduced

Scheme Annuity interest rate may be lower

Higher inflation may have been assumed

Shorter time to NPA

Question 3

Why has CETV gone down?

Answer 3

Scheme funding position may have got worse

Scheme discounting rates may be increased

Scheme Annuity interest rate may be higher

Lower inflation may have been assumed

Longer time to NPA

Question 4

Best Estimate Method vs Alternative Method

Answer 4

Cost of providing member benefits in the scheme

vs

Used when Trustees want to pay CETV above a minimum level

Question 5

How to calculate a CETV?

Answer 5

STEP 1

Calculate preserved pension at date of leaving

STEP 2

Revalue the preserved pension to Scheme NRA

STEP 3

Calculate the Capital Cost of buying the Revalued Pension at Schemes NRA

STEP 4

Discount the cost back to the date of calculation = ICE - Initial cash Equivalent

STEP 5

Make any necessary adjustments to ICE (for scheme underfunding / or an allowance for discretionary increases