What’s the difference between a pension fund value and a pension transfer value?

Could you help explain the difference between pension fund values and pension transfer values please?

Question asked by Ms J Barnes
Are You Pension Happy?
Call us on 02084327334
I know how much my pension is worth
I know how much my pension costs
I have clear financial goals for my retirement

Answered by Michael Englefield

 

Pension fund value vs transfer value

How to work out a defined contribution pension fund value

If you have a defined contribution or money purchase pension, you’ll probably have received a pension statement with your fund value on it. There’s not much more you need to do to calculate your fund value.

What is my defined contribution pension pot worth?

As the name of these types of pension suggest, defined contribution pensions are pots filled with a finite amount of cash that you’ve been contributing to during your working life. A pension fund value is simply the amount of money in your pot, which you’ll then have to use to provide yourself with a retirement income later in life.

How you provide a pension income is up to you, thanks to the reforms enshrined in the new pension freedoms.

Calculating the pension you’ll get from money purchase scheme is far harder, as it very much depends on your circumstances and how you decide to provide yourself with a retirement income.

Getting pensions advice can help steer your decisions and provide you with the retirement you’d prefer to have.

Calculating your final salary pension transfer value

For a defined benefit or final salary pension, there’s no pot of money with your name on it. What you might receive instead is a cash equivalent transfer value or CETV from your provider.

A final salary pension transfer value is the sum of money your employer will offer in exchange for you leaving the pension scheme and forfeiting your right to any future income from the plan.

Calculating your pension transfer value

Today’s transfer values are particularly high as pension funds try to incentivise people to transfer out of final salary schemes due to issues of affordability. Final salary pensions are expensive promise, compounded by low interest rates, plummeting bond yields and rising longevity.

There has been a rush of people taking advantage of high pension transfer values and cashing in their final salary pensions to take advantage of greater flexibility.

If you haven’t received a pension transfer value, why not request a consultation with a pensions adviser and discuss your options with them? Alternatively, The Drewberry DB Pension Transfer Calculator can give you a rough idea of what your final salary pension transfer value might be.

If you still want to transfer your final salary pension, they can apply for an official CETV from your provider on your behalf without you having to lift a finger.

Pension fund value
 
Pension
 
Cash equivalent transfer value
 
Pension transfer value
 
Money purchase pension
 
Final salary pension
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Start your journey today...
  Find out how a Drewberry financial adviser can help you reach your destination by making the most of your finances.
Call us on 

Frequently Asked Pensions Advice Questions

 
I’ve had a with-profits pension for sometime and it’s value hasn’t really changed....
 
I was told that my pension was ‘frozen’. Am I able to access this money at all and...
 
I have a protected rights pension from the past and another one I’m currently paying into. I’m...
 
Unfortunately my passing is inevitable and I have quite a big pension fund I’m unlikely to use...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Doug Harvey
05/09/2018

Victoria swiftly helped in finding a solution which offered the required cover, with a more competitive premium.

Huw Davies
05/09/2018

The service I received from Drewberry was excellent. Egle provided me with very detailed information about my insurance options and explained the pros and cons of each option clearly.

James Ager
21/08/2018

Friendly, helpful and knowledgeable. Nadeem Farid searched the market and found a product that matched our needs.

We are rated 4.9/5 based on 1742 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.93 / 5 Average
652 Reviews
Verified Buyer
Overall Rating
The whole process was a pleasure. Drewberry we're easy to deal with, polite, knowledgeable and helpful
Verified Buyer
Overall Rating
Very good, clear service would recommend to friends and family
Anon
Overall Rating
Sam Carr provided an efficient and professional service.
Verified Buyer
Overall Rating
Sam Carr provided a professional but enthusiastic service and helped make the whole process very straight forward. Goodness knows I have been through enough application forms recently. My insurance product was never going to be easy to find and I had been rejected on a number of other occasions through others ironically due to well managed common health conditions. I identified Drewberry in a last and disappointing trawl on th web to find someone that actually wanted to take on a difficult case like me. Some brokers wouldn't even consider me. When we applied for my first choice product Sam wasn't at all deterred by the long wait for my GP report or the final rejection that came back from the insurer, sadly I have become used to it. Within a day he had lined up the second choice and to my surprise he had hit the nail on the head and introduced me to the correct insurer and terms for my needs whilst nogotiating an excellent premium. I am extremely satisfied with what Sam has achieved for me and I would have no hesitation in recommending either him or Drewberry to friends, family and and business contacts. In the future, Drewberry will be my first point of contact. Many thanks!
Kym
Overall Rating
Tailored to my need and the staff gave very good service