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Transfer boost as buyout rules bite

Transfer values from occupational pensions are rising by up to 50 per cent as new rules take effect.

National IFA Millfield says a client who requested a cash-equivalent transfer value in November was quoted £362,573 – a 48 per cent increase on the £245,541 that was previously offered in March.

Cash-equivalent transfer values received a boost when the Department for Work and Pensions introduced rules on June 11 requiring solvent firms winding up schemes to buy out benefits in full.

In August, the actuarial profession called for a further increase in CETVs to reflect improvements in the economic outlook and improved mortality statistics.

Millfield pension specialist Graham Duckett says higher transfer values will in many cases make the difference between transferring and not transferring as critical yields come down.

He says advisers should revisit clients who looked at transferring in recent years but stayed in schemes because critical yields were still too high.

Scheme trustees have the right to decline a request for a CETV within 12 months of the last one supplied.

Duckett says: “Previously, CETVs reflected the value of a promise. Now, if a company is strong, it reflects a guarantee. Anyone who requested a transfer in the last two years should go and ask for another one and reappraise the situation.”


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