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Final-salary plans show generosity on transfer values

Transferring out of final-salary pension schemes on valuations based on the minimum funding requirement leaves members short-changed but a growing number of schemes are paying more than they are legally bound, a survey shows.

Over half of big final-salary schemes are calculating transfer values in excess of the minimum required under the Pensions Act 1995, according to Hymans Robertson.

A further 23 per cent are considering increasing transfer values to reflect the downgrading in the MFR, the survey of 69 final-salary schemes of over £1m shows.

Schemes were also willing to receive transfers from other schemes, despite uncertainty over the future of the MFR and against a background of closure of many schemes to new entrants.

Actuarial head Ross Russell says: “This survey was designed to give an indication of how schemes are reacting to recent MFR changes. As a firm, we believe that the MFR basis is generally no longer appropriate for calculating individual transfer values to or from our clients&#39 schemes. Unless there are special circumstances, we have been advising our clients accordingly.”

Partner Crawford Taylor says: “Anyone wishing to transfer on the MFR basis from an occupational final-salary pension scheme has got to have a very good reason or be extremely optimistic about future returns from assets other than bonds.”

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