SJP DB Benefit Transfer Study Guide Flashcards
possible reasons to consider transfer
client has sufficient guaranteed income elsewhere serious ill approaching retirement age and enough wealth to support themselves Minor additional reasons SJP will produce superior growth Scheme is under funded low death benefits consolidation
Analysis Service
Transfer Value Analysis System (TVAS) required by FSA for DB schemes with exception at retirement and wishes to immediately crystallise.
Report to transfers from employer sponsored schemes including deferred annuity plans
Do not except execution only
TVAS key points
No forms signed without BA concent
1) On Transfer exchanges defined ret benefits for stock market with no guarantee
2) Legal obligations on trustees to deal with providing info and may take longer to respond to O&M
3) likely to take longer to research
4) Only consider for those who have left service
5) Advice based clear understanding capable of losing benefits
Options on Leaving Service
Those have left service options include: Take early benefit leave benefits where they are transfer to new employer scheme transfer to private Before Oct 2015 less 2 year service could take refund, no longer avaiable
Early Retirement
NRD mainly 60 to 65
Earliest age 55
Typical actuarial penalties
Preserved Benefits
3 methods for revaluing GMP
1) Section 148
2) Fixed Revaluation
3) Limited revaluation
Calc CETV
ref social security act 1985 consist approach
Revaluation GMP
Section 148
GMP in line with National Average Earnings (formally section 21 orders). As significant liability only public sector worker revalue GMP this way
Fixed Revaluation - Intro 1978 fixed rate depending on members leaving date
Limited Revaluation available prior 6/4/97 applicable those left service before this date
GMP pension in payment escalation
GMP accrued 6/4/1988 must index at lower of 3%pa and RPI
GMP accrued between 1978 and 1988 increase by state not scheme
GMP Post April 2011 RPI replaced by CPI
No further GMP benefits accrue from 6/4/97 but GMP upto 5/4/97 preserved and increased by lower of 3% and RPI (CPI post April 2011)
Revaluation of non GMP upto retirement age
Depends on date left scheme
< 1/1/86 - no revaluation
1/1/86 to 31/12/90 - LPI to max 5% RPI (CPI post 2011)
1/1/91 to 5/4/97 LPI
from 6/4/97 Excess GMP to 5/4/09 LPI to 5%
Post 6/4/99 RPI max 2.5% (CPI from 2011)
Calc TV
Since 1/10/08 regulator scheme trustees solely responsible
1) establish revalued preserved benefit at NRD
2) Cost to provide benefit ie annuity rate
3) calc cost of providing revalued benefit
4) amount discount ie assumed rate of return required
Factors an actuary will consider
4 most common 1 Discretionary increases 2 Schemes in surplus 3 Legislative changes 4 Under funded schemes
Sect 32
Intro FA 1981 MP
guaranteed part normally via with profits
Pension Commencement LS/Block Transfers
commutation factors
Possible > 25% for pension accrued before 6/4/2006 because
1) member has more service than years of the scheme
2) member pensioned some eg bonus or P11d
3) Salary Offset
Block Transfer is where
1) More than 1 member transferring benefits
2) neither transferors has been a member for more 12 months
3) no other pension commencement LS are being protected
Transferring to PP
since 1988 PP access at 55 Fund Choice Fund Switching Flexible Retirement Options
