The Department for Work & Pensions has been criticised after announcing another consultation into the calculation of pension transfer values.
They originally referred the matter to the Faculty and Institute of Actuaries in early 2005, but the actuarial profession could not reach an agreement on their own consultation document, and passed the issue back to the government. The consultation aims to make sure those leaving defined benefit schemes get fair transfer values and ensuring that schemes are not weakened, disadvantaging the remaining members.
Our view
A difference of just 1% pa in assumptions on investment returns can make thousands of pounds difference in pension fund figures. Pension scheme actuaries at the moment have some discretion on what assumptions they make which can make huge differences to pension fund values and is deemed not fair on many pension scheme members. If the industry cannot reach an agreement then the Government Actuaries Department should take over.