Annuity Rates Unchanged for Transfer Values

Annuity Rates Unchanged for Transfer Values.

We have covered a number of times on this site the fact that with current gilt yields being so low, defined benefit transfers values are much higher than they were prompting many pension scheme members to consider transferring out to take advantage of potentially better death benefits and retirement flexibility using flexible drawdown schemes.

This week, it has been confirmed that the annuity rate used when working out and calculating transfer value analysis calculations for a potential defined benefit transfer to work out the critical yield (i.e. average growth rate) required in a private pension or money purchase pension to match the benefits that may be available if you leave your pension in the defined benefit scheme.

This annuity rate has been set at 2.1%pa until October 2016, which has been at this level since January 2016.

Comment

This does not mean that transfer values offered by the defined benefit scheme will not increase, it means that the assumptions that we use as financial advisers when conducting TVAS transfer value analysis scheme comparisons remain the same.